November 8th, 2019 10:04 AM by Richard Sardella MLO.100007700/NMLS 233568
Interest rates continue to increase here and globally. The 10 yr. this morning at 1.94% +2 bps from yesterday, 23 bps since last Friday, 1.69% to 1.92%. The 16 month trade standoff between the US and China thaw, the Fed signaling no more rate cuts for a while, tensions in the mid-east cooling, less concerns over Brexit with the exit now delayed until at least January and markets unconcerned about the impeachment at the moment; all combining to lessen demand for safety….risk now on in stocks and bonds.
Not much new news this morning. China's comments on Tuesday that tariffs will be lifted by both the US and China took hold and is driving fears away. Meanwhile, comments from the US have been cautious, and President Trump hasn't had much to say about rolling back tariffs. Questions remain over how much ground—if any —the Trump administration had agreed to give. Markets overall, stocks and interest rates, optimistic the trade war was finally nearing an end. Suspicions still there though, but markets are seeing the end in sight. "There is no agreement at this time to remove any of the existing tariffs as a condition of the phase one deal," said President Trump's senior trade adviser, Peter Navarro in an interview on Fox Business Network. "The only person who can make that decision is President Donald J. Trump, and it's as simple as that." A Hudson Institute expert who advises the Trump administration said he believed the statement from China's Commerce Ministry "may represent wishful thinking on the Chinese side more than a specific agreement."
At 9:30 am ET the DJIA opened -8, NASDAQ -12, S&P -4. 10 yr. at 9:30 1.93% +1 bp after trading down to 1.90% overnight and at 8:00 am 1.96%. MBS prices at 9:30 -8 bps from yesterday's close and -7 bps from 9:30 yesterday.
At 10:00 am ET the mid-month U. of Michigan consumer preliminary sentiment index expected at 96.0 from 95.5 in October; the index reported 95.7.
Also, at 10:00 am ET Sept wholesale trade expected to fall 0.3%, as reported -0.4% the lowest inventory build since October 2017.
Markets are heading into a long weekend. Monday, markets will be closed for Veterans Day; stocks and bonds closed.
Nothing else scheduled today but remarks from Congress on impeachment possible as well as Trump tweets.
Our technicals are solidly bearish presently and have been negative for interest rates since the beginning of the month. It's possible MBS and treasury may improve a little today with the long weekend ahead, but there is little likelihood of anything significant. The US and global interest rates increasing on trade optimism and global tensions easing, betting on future increases in growth. The Fed had it right, signaling a pause in interest rates cuts. In the rearview mirror, global interest rates were excessively fearful and correcting now. In the windshield, the optimism over the trade issues being resolved is excessive.
PRICES @ 10:10 AM
10 yr. note: 1.92% unch
5 yr. note: 1.72% -1 bp
2 Yr. note: 1.66% -1 bp
30 yr. bond: 2.39% unch
Libor Rates: 1 mo. 1.758%; 3 mo. 1.901%; 6 mo. 1.922%; 1 yr. 1.983% (11/7/19)
30 yr. FNMA 3.5: @9:30
15 yr. FNMA 3.0: @9:30
30 yr. GNMA 3.5: @9:30
Dollar/Yuan: $6.9905 +$0.0121
Dollar/Yen: 109.33 +0.05 yen
Dollar/Euro: $1.1025 -$0.0025
Dollar Index: 98.33 +0.18
Gold: $1459.70 -$6.70
Crude Oil: $56.26 -$0.88
DJIA: 27,627.85 -46.95
NASDAQ: 8427.24 -7.28
S&P 500: 3080.28 -4.90
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.