May 15th, 2018 9:43 AM by Richard Sardella MLO.100007700/NMLS 233568
It’s back to 3.04% this morning for the 10-yr (3.06% at 10:00 am EST); what technicians see as a critical support after hitting it three weeks ago. It was only a matter of time. Now through the rest of the session, the 10-yr has to stabilize and close lower than 3.04% as it did three weeks ago after which it improved back to 2.92%. Seems rather mundane we talk in ranges of a few basis points as the end all for rates, but that is what we have had now for weeks. MBS prices getting hit hard, down 28 bps from yesterday.
At 8:30 am April retail sales expected +0.3% were at +0.3%; excluding auto sales forecasts were for an increase of 0.5%, as reported up just 0.3%; less autos and gas estimates were +0.4%, as reported +0.3%. The strength in the report today was upward revisions to March sales; from 0.6% to 0.8%, less autos revised from +0.2% to +0.4%, less autos, and gas from +0.3% to +0.4%. The April control group sales which are another core measure and a direct input into GDP, rose 0.4%. Take the two months together, and the takeaway is retail sales are beginning to improve after weak Jan and Feb sales.
The May NY Empire State manufacturing index expected at 115.5, increased to 20.1; new orders have been very strong in this report and picked up the pace with a 7-point gain to 16.0. Unfilled orders did pile up a bit but at 5.0 only at a modest pace, which is good news for this sample considering signs that capacity is being stretched.
At 10:00 am the May NAHB housing market index was expected at 69. The index was at 70, while April was revised lower to 68.
Also at 10:00 am March business inventories, expected +0.2%; inventories were unchanged after increasing 0.6% in Feb.
Higher rates this morning are having a direct impact on the dollar, increasing in a strong move this morning. The break over 3.00 and 3.04% is triggering huge volatility in stock currencies and rate markets. For weeks we have reminded readers that our technical analysis has been bearish, and this morning we were proven correct. On the international front, the trouble between Israel and Palestinians hasn’t ignited many market fears — no safe haven buying into US treasuries. China/US trade fears are presently waning; China plans to send Vice Premier Liu He to Washington for more trade talks; that the two countries are calming and are now in detailed talks lessens demand for safe US treasuries.
PRICES @ 10:10 AM
10 yr. note: -15/32 (47 bp) 3.06% +7 bp
5 yr. note: -6/32 (18 bp) 2.90% +4 bp
2 Yr. note: -1/32 (3 bp) 2.57% +2 bp
30 yr. bond: -34/32 (106 bp) 3.19% +6 bp
Libor Rates: 1 mo 1.933%; 3 mo 2.330%; 6 mo 2.500%; 1 yr. 2.757$ (5/14/18)
30 yr. FNMA 4.0 June: @9:30 101.25 -23 bp (-34 bp from 9:30 yesterday)
15 yr. FNMA 4.0: @9:30 102.41 -11 bp (-19 bp from 9:30 yesterday)
30 yr. GNMA 4.0: @9:30 101.97 -17 bp (26 bp from 9:30 yesterday)
Dollar/Yen: 110.27 +0.65 yen
Dollar/Euro: $1.1837 -$0.0093
Dollar Index: 93.43 +0.77
Gold: $1292.20 -$26.00 (strong dollar)
Crude Oil: $70.55 -$0.41
DJIA: 24,716.58 -182.83
NASDAQ: 7332.51 -78.80
S&P 500: 2709.42 -20.71
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.