July 11th, 2017 3:24 PM by Richard Sardella MLO.100007700
Another quiet start in the bond and mortgage markets this morning; prices at 8:30 am EDT slightly lower, with the 10-yr. unchanged at 2.38%. Yesterday was also a quiet session with little direct news. There hasn’t been any economic or any other news the past two days that moved markets as we await Janet Yellen’s testimony in Congress tomorrow and Thursday.
At 6:00 this morning, the June NFIB Small Business Optimism index; the index slipped a little from May from 104.5 to 103.6 on estimates of an unchanged read. The lowest level of the year in a continuation of the mild decline from the 12-year high set in January. The June setback, which put the index within the range but near the bottom of analysts' expectations, reflected disappointment over the gridlock in the Senate on the health care reform bill, according to the NFIB. Four of the index's ten components posted a gain, five declined, and one remained unchanged. Overall the index is still strong.
Congress took 10 days off before returning yesterday. Guess they were too tired passing key legislation. Health care still unresolved but as is usual for the party in “charge,” reports that a bill could come soon. The Republican legislation would phase out the Obamacare expansion of Medicaid health insurance for the poor and disabled, sharply cut federal Medicaid spending beginning in 2025, repeal most of Obamacare's taxes, end a penalty on Americans who do not obtain insurance and overhaul Obamacare's subsidies to help people buy insurance with tax credits. Whatever it is, it is likely to be another false start. Congress has three weeks left before members get tired again and take off for Summer recess until Sept 5th. And…they get paid, retirement--and free health care. No tax cuts this year, regardless what the politicians say; no infrastructure spending this year no matter what politicians say.
At 10:00, May wholesale inventories expected +0.3%, as released +0.4% and April revised from -0.5% to -0.4%. The increase will support the Atlanta Fed’s GDPNow that will be released later today.
Also at 10:00, the May JOLTS job openings were expected to have declined from 6.044 million to 5.975 million. Not sure why anyone cares about it, but it does get ink. Job openings lower, at 5.666 million.
At 1:00, Treasury auction $24B of 3 yr. notes, tomorrow $20B of 10s and Thursday $12B of 30s.
Crude oil was a little lower this morning, but has found support at 10:00 am. Forecasters who were expecting higher prices this year are beginning to change their outlooks; this morning BNP Paribas reduced its forecasts for Brent crude by $9 to $51 a barrel for 2017 and by $15 to $48 for 2018. Barclays also cut its 2017, and 2018 Brent forecasts to $52 a barrel for both years from $55 and $57 respectively. Without a significant fall in oil inventories or a decline in U.S. drilling and production, Goldman Sachs said U.S. crude could drop below $40 per barrel.
Should be another quiet session with investors and traders awaiting Yellen tomorrow at the House Financial Services Committee.
Interest rates and MBS prices have been generally unchanged for the last four sessions; today we expect the same listless activity. Our technical models and momentum oscillators remain bearish; to turn that around, the 10-yr. note yield must drop below 2.30% or hold at this level for another 5 sessions; that isn’t likely though.
PRICES @ 10:05 AM
10 yr note: -2/32 (6 bp) 2.38% unch
5 yr note: -1/32 (3 bp) 1.94% +1 bp
2 Yr note: unch 1.39% unch
30 yr bond: -2/32 (6 bp) 2.93% unch
Libor Rates: 1 mo 1.223%; 3 mo 1.304%; 6 mo 1.462%; 1 yr 1.750%
30 yr FNMA 3.5 July: @9:30 102.53 -2 bp (+6 bp frm 9:30 yesterday)
15 yr FNMA 3.0: @9:30 102.51 -3 bp (+7 bp frm 9:30 yesterday)
30 yr GNMA 3.5: @9:30 103.31 -12 bp (-7 bp frm 9:30 yesterday)
Dollar/Yen: 114.32 +0.28 yen
Dollar/Euro: $1.1404 +$0.0005
Dollar Index: 96.09 +0.03
Gold: $1210.60 -$2.60
Crude Oil: $44.42 +$0.02
DJIA: 21,406.92 -1.60
NASDAQ: 6185.75 +9.36
S&P 500: 2425. 10 -2.33
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.