March 14th, 2019 9:47 AM by Richard Sardella MLO.100007700/NMLS 233568
Both stock indexes and the interest rate markets started quietly this morning. After the 10-yr note closed below 2.63% on Tuesday there has been no movement of consequence since. No follow-through, but also no push back.
At 8:30 am ET weekly jobless claims were +6K to 229K. February import and export prices increased more than expected; imports and exports both increased by 0.6% against +0.4% and +0.2% respectively. January import prices originally reported down -0.5% was revised to up +0.1%. There was no reaction to the higher prices.
Maybe slight support for the rate markets this morning; overnight it was announced that the summit with China’s Xi and President Trump that was scheduled later this month at Trump’s resort in Florida has been delayed at least until the end of April. China is pressing for a formal state visit rather than a lower-key appearance to sign a trade deal. “Major issues” remain unresolved in the talks, with few signs of a breakthrough on the most difficult subjects including treatment of intellectual property. Chinese officials are also concerned over the appearance of the deal being one-sided, and are wary of the risk of President Trump walking away even if Xi were to travel to the U.S. Trade is one key to pushing rates down. Any roiling adds to investor concerns and does add support to the view of safety. US stock indexes were a little jittery in early trade this morning.
More negative global economic news: China's February Industrial Production increased 5.3% year-over-year (expected 5.5%; last 5.7%), which was the slowest growth rate since 2002. February Retail Sales increased 8.2% year-over-year (expected 8.1%; last 8.2%) while February Fixed Asset Investment grew 6.1% year-over-year, as expected (last 5.9%). The February Unemployment Rate increased to 5.3% from 4.9%, marking a two-year high. Germany's IFO Institute lowered its 2019 GDP growth forecast to 0.6% from 1.1%, but expects a rebound to 1.8% in 2020.
At 9:30 amthe DJIA opened up +7, the NASDAQ added +5, and the S&P remained unchanged. The 10 yr stood at 2.61%, unchanged from yesterday.
At 10:00 am January new home sales were expected at 612K units; as released, the number was 607K; December was revised to 652K from 621K; a 6-month supply.
Stock investors were encouraged with the recent rebound on the key indexes. It’s likely a short-lived improvement, but that is a minority view; most of the analysts that appear on CNBC remain solidly bullish. We find it difficult to agree, the global economic outlook continues to deteriorate but is pushed away on the idea that the US can grow even with the world slowing. Possibly investors, money managers and Wall Street, in general, see sun after the clouds that are circulating, willing to ignore the actual data.
Our tech models remain positive although, as has been the case for the last two months, momentum in either direction for rates remains close to neutral. The 9-day RSI is positive now but doesn’t demonstrate increased momentum in either direction. That said, we will hang in there; it’s a day-to-day decision whether to add more to the long position we hold now. As I have noted, and as you know, at these low levels it becomes tedious. One support we consider is the comparison of US interest rates to very low global rates of major economies.
PRICES @ 10:10 AM
10 yr. note: +2/32 (6 bp) 2.61% unch
5 yr. note: +2/32 (6 bp) 2.42% -1 bp
2 Yr. note: unch 2.46% unch
30 yr. bond: -1/32 (3bp) (3.02% unch)
Libor Rates: 1 mo. 2.483%; 3 mo. 2.610%; 6 mo. 2.676%; 1 yr. 2.859% (3/13/19)
30 yr. FNMA 4.0: @9:30 102.30 +4 bp (-1 bp from 9:30 yesterday)
15 yr. FNMA 3.5: @9:30 101.96 +9 bp (+7 bp from 9:30 yesterday)
30 yr. GNMA 4.0: @9:30 102.86 +3 bp (-4 bp from 9:30 yesterday)
Dollar/Yuan: $6.7274 +$0.0204
Dollar/Yen: 111.59 +0.43 yen
Dollar/Euro: $1.1300 -$0.0026
Dollar Index: 96.75 +0.28
Gold: $1293.80 -$15.90 (strong dollar)
Crude Oil: $58.91 +$0.32
DJIA: 25,635.11 -67.78
NASDAQ: 7628.86 -14.54
S&P 500: 2804.01 -6.91
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.