February 8th, 2019 9:28 AM by Richard Sardella MLO.100007700/NMLS 233568
Stocks weaker earlier this morning, the 10 yr at 8:30am ET 2.64% -2 bps after declining 4 bps yesterday. No movement though in the MBS markets.
There are no economic releases today.
This week there have been many reports and comments about the rapidly slowing global economies and the lack of progress with US/China trade talks. On trade, this week Sec of Commerce said a trade deal is “miles” away, and Larry Kudlow chimed in with more comments that there is no deal within sight. Meanwhile, President Trump was still talking positively; early this week he was espousing a meeting between him and China’s President Xi, yesterday a different tone and Trump admitting a meeting is unlikely in March. On March 1st the deadline Trump initiated to delay more tariffs; will he actually increase Chinese tariffs as he has said? Tariffs now at 10% would increase to 25% according to prior statements from the White House.
Global growth, the trade issues increasing movement to safety in US treasuries. The Wall Street Journal says the two sides have not even drafted an accord specifying the matters they agree and disagree on. The report comes just a day after White House economic advisor Larry Kudlow said there is a "pretty sizable distance to go" before China and the U.S. reach a deal. President Donald Trump also says that a meeting with Chinese President Xi Jinping will not take place before the crucial March deadline. U.S. stocks fell sharply yesterday as it became clear the meeting will not take place before the deadline. The Dow Jones Industrial Average lost 220 points, while the S&P 500 dropped 0.9%.
Equity markets have had a great run since the beginning of the year, now central banks and governments cast doubt on the health of the global economy. The European Commission slashed forecasts for the euro region yesterday, while the Bank of England said the U.K. may grow at its slowest pace in a decade. US growth still looking good according to economists and analysts but we too are going to see slower growth this year. This morning The U.K.’s FTSE 100 Index fell less than 0.05 percent. Germany’s DAX Index sank 0.5 percent to the lowest in more than three weeks. The MSCI Emerging Market Index dipped 0.4 percent to the lowest in more than a week. The MSCI Asia Pacific Index decreased 1 percent to the lowest in more than a week on the biggest dip in more than six weeks.
At 9:30 the DJIA opened -125, NASDAQ -49, S&P -12. After 7 weeks of gains, the NASDAQ will end this week with losses. At 9:30 the 10 yr note 2.64% -2 bps frm yesterday. Fannie 4.0 30 yr coupon at 9:30 +5 bps from yesterday’s close and +5 bps from 9:30 yesterday.
The March 1st tariff deadline, the border wall, the potential of another government shutdown; all loom over markets.
Treasuries are improving technically and fundamentally; our models and other momentum oscillators are bullish. Sluggish but working lower. MBS rates though have seen very little improvements. Earlier this week there was a lot of volatility in MBS prices but yesterday and today so far not any appreciable change.
PRICES @ 10:00 AM
10 yr note: +7/32 (22 bp) 2.63% -3 bp
5 yr note: +5/32 (15 bp) 2.43% -3 bp
2 Yr note: +2/32 (6 bp) 2.46% -2 bp
30 yr bond: +15/32 (47 bp) 2.98% -2 bp
Libor Rates: 1 mo 2.516%; 3 mo 2.697%; 6 mo 2.765%; 1 yr 2.948%
30 yr FNMA 4.0: @9:30 102.22 +5 bp (+5 bps frm 9:30 yesterday)
15 yr FNMA 3.5: @9:30 101.75 +8 bp (+4 bps frm 9:30 yesterday)
30 yr GNMA 4.0: @9:30 102.77 +8 bp (+7 bps frm 9:30 yesterday)
Dollar/Yuan: $6.7448 unch (China celebrating the Lunar New Year this week)
Dollar/Yen: 109.75 -0.06 yen
Dollar/Euro: $1.1349 +$0.0009
Dollar Index: 96.53 -0.04
Gold: $1316.30 +$2.10
Crude Oil: $52.58 -$0.06
DJIA: 24,983.00 -186.53
NASDAQ: 7236.76 -51.59
S&P 500: 2689.77 -16.28
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.