November 29th, 2019 9:27 AM by Richard Sardella MLO.100007700/NMLS 233568
A number of data points at 8:30 am ET this morning sent interest rates up and MBS prices down. As for the equity markets, not much movement, even though the data would normally spark a better reaction.
At 8:30 am ET the Q3 preliminary GDP, the second look, was widely expected at 1.9% as it was on the advance report, GDP increased to 2.1%, real consumer spending +2.9% better than 2.8% expected, GDP price index +1.7% as expected. Q3 has been seen as a soft quarter, still is, but the data is slightly stronger. October durable goods orders much better than forecasts; +0.6% on estimates of -0.7%, excluding transportation orders +0.6% on estimates of +0.1%, core capital goods orders were thought to be +0.1%, reported at +1.2% the biggest increase in nine months and up 0.9% on a year-on-year basis. Finally, at 8:30 am ET weekly jobless claims were anticipated at 218K -9K, claims declined to 213K -15K.
Early this morning MBA weekly mortgage apps; +1.5%, purchases -1.0%, refinances +4.0%.
At 9:30 am ET the DJIA opened +10, NASDAQ +19, S&P +4. 10 yr 1.77% +3 bps. MBS prices -6 bps from yesterday’s close and -9 bps from 9:30 yesterday.
At 9:45 am ET Nov Chicago purchasing mgrs. index expected at 46 reported at 46.3.
At 10:00 am ET two more key data points. Nov pending home sales declined 1.7% on thoughts of +0.8%, yr/yr +4.4% (more details this afternoon). October personal income and spending; income expected +0.3% was unchanged, spending expected +0.3% as released +0.3%. Oct PCE +0.2% on forecasts of +0.3%, core PCE +0.1% as expected. PCE yr/yr +1.3% on thoughts of +1.2%, yr/yr core PCE +1.6% better than 1.7% expected.
At 1:00 pm $32B 7 yr note auction
President Trump commented yesterday that the phase one trade deal is close to completion. China earlier this week also made similar remarks. China’s Ministry of Commerce said officials “reached consensus on properly resolving relevant issues” and agreed to stay in contact on the remaining points in phase one. The US Trade Representative’s office confirmed a conversation took place. Trump in an interview with former Fox News host Bill O’Reilly said that he’s holding up the trade deal to ensure better terms for the US, “We can’t make a deal that’s like, even. We have to make a deal where we do much better, because we have to catch up.”
JPMorgan is saying with improving growth, it will push yields higher in the second half. The firm expects the 10-year note to yield 2.05% at the end of next year, up from 1.77% now. JPMorgan expects the Fed to cut rates by 25 basis points in the second quarter. Net new bond supply may drop by about 18%, driven mostly by lower Treasury and high-grade corporate issuance. Don’t make bets on it; the big banks don’t have a good track record for longer-term forecasts.
The long weekend begins about noon today; data this morning would have pushed rates higher and prices lower, but since most will be out until Monday and with that much time away, making major moves in either stocks or bonds isn’t likely. Our technicals remain positive near-term, but there isn’t any real change in rates the last two weeks, and we expect that will continue into next week when congress gets back, and markets get recent data on consumer spending over the weekend.
PRICES @ 10:10 AM
10 yr. note: 1.76% +2 bp
5 yr. note: 1.61% +2 bp
2 Yr. note: 1.60% +1 bp
30 yr. bond: 2.19% +1 bp
Libor Rates: 1 mo. 1.701%; 3 mo. 1.908%; 6 mo. 1.914%; 1 yr. 1.941% (11/26/19)
30 yr. FNMA 3.5: @9:30 102.63 -6 bp (-9 bps from 9:30 yesterday)
15 yr. FNMA 3.0: @9:30 102.31 -5 bp (+1 bp from 9:30 yesterday)
30 yr. GNMA 3.5: @9:30 103.61 -20 bp (-21 bps from 9:30 yesterday ?)
Dollar/Yuan: $7.0289 -$0.0046
Dollar/Yen: 109.27 +0.22 yen
Dollar/Euro: $1.0996 -$0.0026
Dollar Index: 98.41 +0.16
Gold: $1454.20 -$6.10
Crude Oil: $58.41 unch
DJIA: 28,093.72 -27.96
NASDAQ: 8671.69 +23.75
S&P 500: 3143.79 +3.27
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.