March 15th, 2019 9:17 AM by Richard Sardella MLO.100007700/NMLS 233568
A better start today in the bond and MBS markets after a quiet season yesterday; the stock indexes before the 9:30 am ET open are also trading better.
At 8:30 the March NY Fed Empire State manufacturing index was thought to be a read of 10-yr note from 8.8 in February. As reported the index dropped to 3.7; this report is seen as a precursor to the wider Philadelphia Fed business index, but the correlation doesn’t always equate. Diminishing growth is now a common theme among many of the regional manufacturing reports. New orders, at only 3.0, are is the worst since May 2017. Unfilled orders are likewise flat at 2.2 with inventories dead flat at zero. Markets usually note the report but don’t react much to it.
At 9:15 am we saw numbers for Feb industrial production and factory use Production was estimated +0.4% from a -0.6% to -0.4 in January; the index was soft at +0.1%, in line with the Empire State earlier today. Manufacturing declined 0.4% after dropping 0.5% in January. Manufacturing, a key data point, was thought to be +0.4%. Factory use was also a little disappointing at 78.2% on expectations of 78.5%. Usually, this report is filed mentally but doesn’t move markets much.
At 9:30 am the DJIA opened up +45, the NASDAQ added +27, and the S&P increased by +4. The 10 yr stood at 2.60%, down -3 bp from yesterday.
At 10:00 am came the most interesting report today. The mid-month University of Michigan consumer sentiment index, expected at 95.2 from the final in Feb 93.8; the index jumped to 97.8, showing out-sized sentiment and the inflation component at 2.4% is down from 2.6% in the last report.
Jan JOLTS job openings were guessed at 7.200 mil from 7.335 mil; openings as reported were 7.581 mil.
We remain positive on the outlook for the bond market. This morning MBS prices are increasing with the 10 yr at 10:00 am at 2.58%, down -5 bps. Going to 2.55% is almost a certainty now. Traders and investors say once the 10 yr gets there we will be faced with the next move for rates. As you will recall, the 10 yr hit 2.55% on the 2nd day of trading this year then pushed to 2.80% before the recent rally.
PRICES @ 10:00 AM
10 yr note: +12/32 (37 bp) 2.589% -3.5 bp
5 yr note: +6/32 (18 bp) 2.39% -4 bp
2 Yr note: +2/32 (6 bp) 2.43% -2 bp
30 yr bond: +23/32 (72 bp) 3.01% -4 bp
Libor Rates: 1 mo 2.481%; 3 mo 2.614%; 6 mo 2.679%; 1 yr 2.845% (3.14.19)
30 yr FNMA 4.0: @9:30 102.32 +10 bps (+2 bps frm 9:30 yesterday)
15 yr FNMA 3.5: @9:30 101.92 +5 bp (-4 bp frm 9:30 yesterday)
30 yr GNMA 4.0: @9:30 102.84 +5 bp (-1 bp frm 9:30 yesterday)
Dollar/Yuan: $6.7135 -$0.0094
Dollar/Yen: 111.50 -0.21 yen
Dollar/Euro: $1.1327 +$0.0021
Dollar Index: 96.58 -0.14
Gold: $1303.80 +$8.70
Crude Oil: $58.39 -$0.52
DJIA: 25,708.12 -1.62
NASDAQ: 7675.23 +44.32
S&P 500: 2815.86 +7.38
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.