October 9th, 2019 9:37 AM by Richard Sardella MLO.100007700/NMLS 233568
Generally, quiet this morning, but interest rates edged a little higher in early trade; 10 yr at 8:00 am ET 1.55% +2 bp, stock indexes better, MBS prices down 3 bps from yesterday's close. At 7:00 am ET the 10 yr was trading at 1.57%.
The only economic release today, weekly MBA mortgage applications. Last week's apps were up 5.2%; it was all refinances that increased 10.0% while purchase apps -1.0%. Lower rates continue to motivate refinancing opportunities as they should.
Trade talks begin tomorrow; China is saying it's open to a trade deal as long as no more tariffs are imposed. Not the kind of wide trade deal President Trump is aiming for, so the nice comments from China are with little significance. Nevertheless, the stock market is improving as Quixote optimism continues. Trump has more tariffs scheduled one this month and another round in Dec. Beijing would offer non-core concessions like purchases of agricultural products but will not concede the major issues that have hampered ay deals so far. President Trump isn't likely to buy into a minor deal, according to comments from the White House. Trump doesn't have the mojo he has had in the past talks; impeachment and a slowing economic outlook, will he acquiesce? Not likely in our view. The Trump administration just blacklisted Chinese companies for humanitarian reasons and refusing visas for people involved with human rights issues over their alleged role in oppression in the far west region of Xinjiang, as well as visa bans on officials linked to the mass detention of Muslims.
At 9:30 am ET the DJIA opened +158, NASDAQ +68 S&P +21. 10 yr 1.55% +2 bps. MBS prices at 9:30 -6 bps from yesterday's close and -19 bps from 9:30 yesterday.
At 11:00 am ET Jerome Powell will co-host a roundtable session with Kansas City Fed President Esther George discussing labor market conditions, local banking, and other topics with a group of local businesses and community leaders in Kansas City, Missouri. The event will be live-streamed. Yesterday Powell said the Fed will begin adding to its balance sheet after stopping purchases a year ago. Media immediately called it a quantitative easing, but in the standard definition, it isn't. The expansion of the balance sheet will be in the bill market (under 1 yr) to offset the recent issues in the overnight repo markets.
At 1:00 pm ET, Treasury will auction $24B of 10 yr notes re-opening the issue from August. The demand is important for mortgage markets.
At 2:00 pm ET the minutes frm the FOMC meeting tree weeks ago; interesting as always but Jerome Powell has been on the rubber chicken circuit this week and last so the minutes will unlikely provide any significant difference than what he has been saying.
The Brexit deal is coming close, Oct 31st. Still, no agreements and likely won't occur unless both sides can agree on Ireland's position on the breakup. Prime Minister Boris Johnson said that he was still cautiously optimistic about a Brexit deal. "We've also been negotiating with our friends and partners in the EU about Brexit, and you know I'm still cautiously, cautiously optimistic.
PRICES @ 10:00 AM
10 yr note: 1.56% +3 bp
5 yr note: 1.36% +1 bp
2 Yr note: 1.42% unch
30 yr bond: 2.07% +3 bp
Libor Rates: 1 mo 1.938%; 3 mo 2.009%; 6 mo 1.963%; 1 yr 1.888% (10/8/19)
30 yr FNMA 3.0: @9:30 102.78 -6 b (-19 bps frm 9:30 yesterday)
15 yr FNMA 3.0: @9:30 102.47 -1 bp (-1 bps frm 9:30 yesterday)
30 yr GNMA 3.0: @9:30 103.13 -3 bp (-5 bps frm 9:30 yesterday)
Dollar/Yuan: $7.1313 -$0.0131
Dollar/Yen: 107.39 +0.31 yen
Dollar/Euro: $1.0980 +$0.0023
Dollar Index: 99.06 -0.08
Gold: $1512.40 +$8.50
Crude Oil: $53.50 +$0.87
DJIA: 26,309.85 +141.85
NASDAQ: 7882.91 +59.14
S&P 500: 2911.22 +18.16
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.