April 9th, 2019 9:24 AM by Richard Sardella MLO.100007700/NMLS 233568
The 10-yr note held again at 8:30 am ET at 2.50%, down -2 bps from yesterday. US stock indexes prior to the 9:30 am open traded weaker.
President Trump turned to the EU on trade issues in the fight over who subsidizes the big airplane makers (Boeing and Airbus). Both sides are accusing the other of aiding the plane manufacturers; Trump yesterday said it would impose tariffs on $11B in imports from the EU because of the European aid. He would target European goods including jetliners, cheese, wine, and motorcycles. The EU called the sum cited by the USTR “greatly exaggerated” and said preparations were underway to hit back. While the EU hasn’t disclosed the number of American goods it would target, Airbus said the bloc would proceed with “far larger countermeasures against the U.S.” Aside from this new threat, Trump is still thinking about import tariffs on foreign autos and parts into the US. The WTO ruled last May that Airbus had received illegal funding for its A380 and A350 models, costing Boeing sales.
March NFIB small business optimism index was a little better than forecasts at 101.8 with estimates for unchanged at 101.7. Concerns over heavy inventories are an emerging issue in the sample. February was unrevised at 101.7. Job readings remain the most important positive in the sample, though further gains in March were limited. This index had been in the 105 to 110 range for most of last year before falling to the low 100 area beginning this year.
There will be no market-moving data today; there are key events tomorrow that will keep the US markets in check today. Treasury will sell $24B of 10s tomorrow with its rate at the lows this year. The ECB is meeting tomorrow. In addition are the minutes from the FOMC meeting three weeks ago, when the policy statement was released and n Powell’s press conference the tone was a more mild Fed than previously was the case. March CPI will also be reported tomorrow.
The president has two more appointments to make for the Fed Boada of Governors; both are more political and conservative than had been expected even though Trump has been at war with the Fed for too-tight decisions (increasing the Federal Funds rate and doing away with QEs) that Trump says should not be happening. The president is pushing two celebrity Republicans and Fed critics — Herman Cain and Stephen Moore. Economists worry that Moore and Cain could erode the Fed’s political independence by focusing on the president’s reelection prospects rather than on what’s best for the long-term health of the economy. But interviews with numerous influential Republicans in the Senate and House show an overwhelming faith in the Fed under Powell, who was confirmed by the Senate in January 2018 in an 84-13 vote — one of the biggest margins for a key Trump nominee.
At 9:30 am the DJIA opened down -175, the NASDAQ dropped -31, and S&P was lower by -15. The 10-yr note stood at 2.48%, down -4 bps.
JOLTS February job openings at 10:00 am were expected at 7.565 mil. As reported they were at 7.087 mil; January openings were at 7.625 mil.
Yesterday the 10-yr held 2.55%, this morning 2.49%, down -3 bps from the close yesterday. We are still holding bullish technicals, as we have noted a few time as long as 2.55% on the 10 holds our bias will remain positive.
PRICES @ 10:00 AM
10 yr. note: +11/32 (34 bp) 2.49% -3 bp
5 yr. note: +3/32 (9 bp) 2.30% -2 bp
2 Yr. note: +1/32 (3 bp) 2.34% -1 bp
30 yr. bond: +17/32 (53 bp) 2.90% -2 bp
Libor Rates: 1 mo. 2.481%; 3 mo. 2.584%; 6 mo. 2.631%; 1 yr. 2.749% (4/8/19)
30 yr. FNMA 4.0: @9:30 102.68 +4 bp (-3 bp from 9:30 yesterday)
15 yr. FNMA 3.5: @9:30 102.24 +10 bp (+6 bp from 9:30 yesterday)
30 yr. GNMA 4.0: @9:30 103.11 +6 bp (-3 bp from 9:30 yesterday)
Dollar/Yuan: $6.7108 -$0.0056
Dollar/Yen: 111.06 -0.42 yen
Dollar/Euro: $1.1279 +$0.0014
Dollar Index: 96.91 -0.15
Gold: $1308.40 +$6.50
Crude Oil: $64.04 -$0.36
DJIA: 26,137.06 -203.96
NASDAQ: 7932.09 -21.79
S&P 500: 2879.67 -16.10
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.