September 10th, 2018 9:34 AM by Richard Sardella MLO.100007700/NMLS 233568
Friday’s August employment report sent the 10-yr out of its one month range, increasing it to 2.94% (2.90% had held any increase since mid-August). Mortgage prices plunged 32 bps. The breach projects a move for the 10-yr to 3.00% to find its next technical support. All along when rates were generally stable, the consensus outlook held that rates would increase as growth increased and inflation levels edged higher driven partly on trade issues that will drive prices of goods higher. The August employment report Friday also confirmed wages are slowly increasing, with average hourly earnings in August increasing 0.4% and yr/yr 2.9% from 2.7% in July and up from estimates of 2.8%.
Last Friday President Trump increased tariffs on China. Data released Saturday showed that China’s trade surplus with the U.S. widened to $31.1B during the month, US importers are front-loading imports ahead of what is coming close to an all-out trade war with the president, who is saying he will go all in ($500B) at a “moment’s notice”; an additional $267B in Chinese goods on top of $200B he has threatened. China’s Ministry of Finance said it will raise export rebate rates for 397 goods, ranging from lubricants to children’s books, meaning that firms shipping such products abroad will pay less value-added tax. The new rates will become effective from Sept. 15, the ministry said in a statement on its website. China’s economy is continuing to find traction and the outlook with trade likely to have negative effects on the country.
At 9:30 am EST the DJIA opened +111, NASDAQ +32, S&P +13. 10 yr at 9:30 unchanged.
At 3:00 pm July consumer credit is expected to add +$13.9B overall. As usual we will focus mostly on revolving credit.
Treasury will sell $73B of 3s. 10s and 30s this week.
This Week’s Calendar:
3:00 PM July consumer credit (+$13.9B)
6:00 am Aug NFTB small business optimism (108.02 from 107.90)
10:00 am July JOLTS job openings (6.665m from 6.662m in June)
1:00 pm $35B 3 yr note auction
7:00 am weekly MBA mortgage applications
8:30 am Aug PPI (+0.2%, core +0.2%)
1:00 pm $23B 10 yr note auction
2:00 pm Fed Beige Book
8:30 am weekly claims (210K +7K)
1:00 pm $15B 3 yr bond auction
2:00 pm Aug Treasury budget (-$164.0B)
8:30 am Aug retail sales (+0.4%, ex autos +0.5%)
9:15 am Aug industrial production and capacity utilization ( production +0.4%, cap utilization 78.3% from 78.1% in July)
10:00 am Mid-month University of Michigan consumer sentiment index (97.0 from, 96.2 in Aug)
PRICES @ 10:00 AM
10 yr. note: +1/32 (3 bp) 2.94% unch
5 yr. note: unch 2.82% unch
2 Yr. note: unch 2.70% unch
30 yr. bond: +6/32 (18 bp) 3.09% -1 bp
Libor Rates: 1 mo. 2.131%; 3 mo. 2.331%; 6 mo. 2.541%; 1 yr. 2.845% (9/7/18)
30 yr. FNMA 4.0 Sept: @9:30 101.45 unch (-10 bp from 9:30 Friday)
15 yr. FNMA 4.0: @9:30 102.21 -5 bp (+4 bp from 9:30 Friday)
30 yr. GNMA 4.0: @9:30 102.03 -5 bp (-14 bp from 9:30 Friday)
Dollar/Yuan: $6.8574 +$0.0126
Dollar/Yen: 111.16 +0.14
Dollar/Euro: $1.1600 +$0.0047
Dollar Index: 95.13 -0.26
Gold: $1202.20 +$1.80
Crude Oil: $68.31 +$0.56
DJIA: 25,991.18 +74.64
NASDAQ: 7910.72 +8.18
S&P 500: 2881.92 +10.24
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.