July 28th, 2020 10:39 AM by Richard Sardella MLO.100007700/NMLS 233568
Stock indexes started lower this morning—the 10 yr. note at 0.60% -1 bp from yesterday. At 1:17 am ET this morning, the 10 yr. traded at 0.64% +3 bps.
The FOMC meeting begins today, tomorrow at 2:00 pm ET, we'll get the policy statement and then Powell's press conference. Until then, markets will sit tight with little movement. Mortgage prices (MBS) very early this morning were trading 9 bps higher than yesterday.
Late yesterday afternoon Senate Republicans put out their stimulus package that, as expected, was light years away from the House bill that was passed two months ago. $1 trillion from Republicans and $3.5 trillion from Democrats. The headline; Republicans want extended unemployment payments at $200.00 per week, Democrats $600.00 per week. The two plans seem difficult to square that a deal can be reached quickly, but politicians can surprise. Pelosi delivered a harsh assessment of the GOP plan, calling it a "pathetic" piecemeal approach and saying it wasn't adequate to the country's needs. "Having said that, we are going to see if we can find some common ground," she said. "But we are not there yet." Supplemental unemployment insurance is expiring, and other elements of the last stimulus legislation are beginning to dry up. Lawmakers are set to leave for an August break in two weeks and will be facing a timetable compressed by the looming November election when they return in September. Economist Diane Swonk commented; Congress is "chasing a moving target" with stimulus bills. "I fear Covid will cast a long shadow on the economy and the aid Congress is offering up is too little too late,"…. "The bankruptcies and failures that will mount could leave us a much smaller and fractured base from which to rebuild." Chuck Schumer had this to say; it's a "slow-motion train wreck." For a change, there are divisions within the Republican senators on what to do.
(Bloomberg News) Beijing reported its first new coronavirus case in three weeks, while the government in Hong Kong is considering postponing upcoming legislative elections. The decision by the UK to curb travel to Spain has received an angry response from Madrid. There was some good news in the US with increasing signs the pandemic is reaching a plateau in the hardest-hit states as public health measures start to pay off. On the vaccine front, Moderna Inc. kicked off its late-stage trial while Pfizer Inc. and BioNTech SE are also continuing studies of their top candidate.
The Fed announced it will extend its lending facility to the end of the year; it was due to expire at the end of Sept.
The pace of mortgages going into forbearance shrunk for the sixth week in a row, though at reduced speed. Coronavirus-related forbearances fell 6 basis points between July 13 and July 19, according to the Mortgage Bankers Association. About 7.74% — or nearly 3.9 million — of all outstanding loans sat in forbearance plans compared to 7.8% and about 3.9 million in the MBA's report the week prior. The share of forborne loans at independent mortgage bank servicers actually rose to 7.85% from 7.83%, while depositories declined to 8.06% from 8.23% over that same period.
At 9:30 am ET, the DJIA opened -93, NASDAQ -40, S&P -6. 10 yr. 0.60% -1.5 bp. FNMA 2.5 30 yr. coupon at 9:30 +9 bps from yesterday and +4 bps from 9:30 yesterday.
At 10:00 am ET, the July Conference Board's consumer confidence index was expected at 95.7 from 98.1 in June; the index as reported 92.6, the expectations outlook fell to 91.5 from 106 in June.
Markets are setting up for tomorrow's FOMC and Powell's press conference today. Stocks will trade quietly, ending the day with not much change. Interest rate markets interesting so far; MBS prices better while the 10 yr. note at 10:00 am ET -2 bps. The 10 yr. is continuing to knock on the door of 0.57%, and no one answers. Treasury markets thinking about the Fed that is thinking about controlling the yield curve, setting rates.
PRICES @ 10:00 AM ET
10 yr. note: 0.60% -1 bp
5 yr. note: 0.27% -2 bp
2 Yr. note: 0.15% -1 bp
30 yr. bond: 1.23% -2 bp
Libor Rates: 1 mo. 0.166%; 3 mo. 0.269%; 6 mo. 0.316%; 1 yr. 0.456% (7/27/20)
30 yr. FNMA 2.5: @9:30 104.64 +9 bp (+4 bp from 9:03 yesterday)
30 yr. GNMA 2.5: @9:30 105.08 +13 bp (+6 bp from 9:30 yesterday)
Dollar/Yuan: $6.999 +$0.0035
Dollar/Yen: 105.07 -0.30 yen
Dollar/Euro: $1.1733 -$0.0019
Dollar Index: 93.66 unch
Gold: $1931.70 +$0.70 (so far this morning gold has traded in a $70.00 range)
Crude Oil: $41.19 -$0.41
DJIA: 26,435 -150
NASDAQ: 10,583 -53
S&P 500: 3230 -9
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.