September 15th, 2020 10:07 AM by Richard Sardella MLO.100007700/NMLS 233568
Stock indexes in pre-open trading this morning continued to increase. At 8:00 am ET, DJIA +200, NASDAQ +120. The Treasury market quiet with rates across the curve unchanged from yesterday, 0.68%. FNMA MBS prices at 8:00 am -2 bps.
At 8:30 am ET, the often watched NY Empire State Sept. Manufacturing Index, although it really isn't that much of importance in the larger perspective, was expected at 6.5 from 3.7 in August, it increased to 17. It is a volatile series, and big swings are not unusual. Also at 8:30 am August import and export prices; imports were forecast +0.5%, as reported +0.9%; yr./yr. estimate -2.1% as reported -1.4%. Export prices were expected +0.4% as released +0.5%; yr./yr. exports were thought to be -3.6%, as released -2.8%. That both import and export prices were stronger than forecasts isn't a major concern but interesting that July prices were also revised. August PPI and CPI were released last week and were also notching up from estimates. The data is something to keep in mind when thinking about inflation; so far, just a sidebar but possibly a clue for the outlook.
At 9:15 am ET, August industrial production and capacity utilization in factories. Production consensus was +1.2%, as released +0.4%, July revised from +3.0% to +3.5%; manufacturing production, expected +1.9% increased just 1.0% and July revised from +3.4% to +3.9%. August capacity utilization at 71.4% against forecasts of 71.6%, but as with production, July factory use was revised better to 71.1% from 70.6%.
At 9:30 am ET, the DJIA opened +203, NASDAQ +126, S&P +28. 10 yr. note 0.68% unchanged. FNMA 2.5 30 yr. coupon unch from yesterday's close and -7 bps from 9:30 yesterday; the 2.0 coupon -12 bps from 9:30 yesterday.
The FOMC meeting begins today; tomorrow, the FOMC policy statement and Powell's press conference should keep markets in check today. Expect Powell to field questions about inflation outlooks at the Fed. Inflation is one of Powell's prime emphasizes; the Fed wants it to increase but hasn't been able to get it moving for years. Recently though, we see and read more and more market economists paying more attention. This morning's data on import and export prices and revisions higher from prior months adds another focal point. The low US and global interest rates and the slowly increasing thoughts that inflation may increase as the Fed wants to see, and an increasing desire to avoid fiat currencies have and will support rising gold prices.
This afternoon at 1:00 pm ET, Treasury will auction $22B of 20 yr. bonds; Treasury revived the 20 yr. bond two months ago to its array of notes and bonds it issues.
PRICES @ 10:00 AM ET
10 yr. note: 0.68% unch
5 yr. note: 0.27% +1 bp
2 Yr. note: 0.14% -1 bp
30 yr. bond: 1.42% unch
Libor Rates: 1 mo. 0.152%; 3 mo. 0.237%; 6 mo. 0.274%; 1 yr. 0.402% (9/14/20)
30 yr. FNMA 2.5: @9:30 105.02 unch (-7 bps from 9:30 yesterday) 2.0 103.05 -2 bp (-12 bps from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30
Dollar/Yuan: $6.7829 -$0.0276
Dollar/Yen: 105.37 -0.37 yen
Dollar/Euro: $1.1842 -$0.0021
Dollar Index: 93.03 -0.03
Gold: $1958.00 -$5.70
Crude Oil: $37.45 +$0.019
DJIA: 28,138 +144
NASDAQ: 11,203 +146
S&P 500: 3413 +29
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.
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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.