November 26th, 2019 10:31 AM by Richard Sardella MLO.100007700/NMLS 233568
Treasuries and MBS opened better this morning, at 8:00 am ET. The 10 yr. is are 1.73% -3 bp, and MBS prices at 8:00 am ET +2 bps.
US and Chinese trade officials were in contact yesterday. China reached consensus on some issues, China's Commerce Ministry said, without giving details. The US Trade Representative's office was also tight-lipped. All Beijing would say was that Steven Mnuchin, Robert Lighthizer, and Liu He discussed core concerns by phone. Lifting tariffs and agricultural purchases were probably among them. Progress or just more rhetoric? A deal is still in the making, but comments and reports like this keep hope alive. There will be a deal, but we doubt it will happen this year. President Trump doesn't see any reason to hurry, and he has another tariff card to play on Dec 15th; 15% tariffs on some $160B in imports from China. Over the weekend, China took a good step forward by announcing more pressure on IP stealing and increased surveillance of intellectual thefts.
Stocks set more new all-time highs yesterday and in pre-opening trading this morning adding to them. New highs are almost a daily thing these days. The large majority of key analysts, economists, and big money managers all agree that the end is nowhere in sight as the bull markets run on.
Congress will be back on Dec 3rd. The panels involved in the impeachment probe will send a report to the House Judiciary Committee then the Judiciary will file official charges against President Trump. After that, on to the Senate for trial. Adam Schiff said the report would include a catalog of White House refusals to cooperate with the inquiry, and that the Trump administration's failure to cooperate could form the basis of a separate article of impeachment - or formal charge of obstruction of Congress against the president.
Preliminary Oct trade deficit better than expected at -$66.35B, but both sides of the ledger were weaker. A contraction in both sides of the balance sheet, exports were off a further 0.7% after a slightly shallower revised 1.3% drop in September while imports decreased a steeper 2.4% following a 2.1 percent slide last time.
Sept Corelogic home prices were a little better than expected +0.4% against +0.3% forecasts. The unadjusted annual inflation rate a ticked higher to 2.1%. On the month, unadjusted prices were 0.1% firmer. The Sept FHFA home price index jumped 0.6% on expectations of +0.2%.
At 9:30 am ET, the DJIA gave back early gains in futures markets, opened -13, NASDAQ +2, S&P -1. 10 yr. 1.74% -2 bps. MBS prices unchanged from yesterday but +6 bps from 9:30 yesterday.
Two key data points at 10:00 am ET; October new home sales thought to be 707K units; sales reported 733K; Sept new home sales were revised from 701K to 738K. Good numbers but with the revised Sept number sales in October down 0.7%. The Nov Conference Board's Nov consumer confidence index was expected at 126.9 the index at 125.5 the softest since June but still a very strong level. Oct revised to 126.1 from 125.9.
At 1:00 pm this afternoon $41B of 5s will be auctioned.
Markets preparing for a long weekend, the bond market is keeping a little safety for insurance. Most players will be gone by 12:00 pm ET tomorrow, and many already out shopping for a plump turkey. Thin trading now through the end of the week. No impeachment news other than what is already known, Congress gone until next Tuesday. So far, impeachment has had little impact on investors or the markets. Our near term outlook still slightly bullish for the bond market, but fundamentally, unless the trade deal falls completely apart, interest rates are not likely to decline much from present levels. MBSs in a very tight range.
PRICES @ 10:10 AM ET
10 yr. note: 1.74% -2 bp
5 yr. note: 1.59% -2 bp
2 Yr. note: 1.57% -3 bp
30 yr. bond: 2.17% -3 bp
Libor Rates: 1 mo. 1.699%; 3 mo. 1.918%; 6 mo. 1.919%; 1 yr. 1.941% (11/25/19)
30 yr. FNMA 3.5: @9:30 102.72 unch (+6 bp from 9:30 yesterday)
15 yr. FNMA 3.0: @9:30 102.36 +7 bp (-2 bp from 9:30 yesterday)
30 yr. GNMA 3.5: @9:30 103.75 unch ( +10 bp from 9:30 yesterday)
Dollar/Yuan: $7.0369 +$0.0005
Dollar/Yen: 109.07 +0.16 yen
Dollar/Euro: $1.1013 -$0.0002
Dollar Index: 98.35 +0.02
Gold: $1453.80 -$3.10
Crude Oil: $58.46 +$0.45
DJIA: 28,098.30 +31.83
NASDAQ: 8639.59 +7.10
S&P 500: 3136.05 +2.41
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.