CHM Blog


Daily Market Analysis

November unemployment rate fell to 4.2% from 4.6% on October and better than 4.5% expected. Job growth was less than forecasts; NFP jobs increased 210K with estimates at 545K, private jobs were expected +525K but increased just 235K. Average hourly earnings slipped a little to +0.3% against 0.4% expected and annually +4.8% with expectations at +5.0%. The labor participation rate increased to 61.8% from 61.6% on October. Kind of a mixed picture on jobs, the jobs report is composed of two surveys -- one of employers and the other of households. The employer survey showed hiring slowed across industries, including declines at automakers and retail outlets. The household survey showed employment surged by 1.14 million people and many came off the sidelines. Less jobs but lower unemployment and increase in the labor participation rate could help keep the Federal Reserve on track to possibly tighten policy faster than planned as inflation proves more persistent previously thought.

Prior to the 8:30 am ET report the 10 yr. note traded at 1.43%, on the initial reaction it dropped to 1.41% but rapidly bounced back to 1.46% by 9 am. MBS prices didn’t move for 30 minutes after the report then eased.

Congress passed a short-term extension of government funding and sent the legislation to President Biden’s desk, averting a partial shutdown. The extension will go the Feb 18th when it will once again go down to the wire to extend the debt ceiling. The House voted 221 to 212 to pass it, the Senate after squabbling over Biden’s vaccine-or-test mandate eventually voted 69 to 28 to pass it. Extending current federal spending through mid-February will give lawmakers more time to negotiate and pass a new set of funding bills.

At 9:30 am the DJIA opened +124, NASDAQ +39, S&P +20. 10 yr. at 9:30 am 1.46% +1 bp. FNMA 2.5 30 yr. coupon at 9:30 am -12 bps from yesterday and -30 bps from 9:30 am yesterday.

At 10 am November ISM non-manufacturing index expected at 65.0 from 66.7 on October, the index increased to 69.1.

Urgent studies to understand how effective Covid vaccines are against omicron have begun in a global collaboration that may yield answers in a few days, a World Health Organization scientist said. Some 450 researchers around the world have begun work to isolate the highly mutated variant from patient specimens. The WHO warned on Sunday omicron could fuel surges with “severe consequences” amid signs that it makes the coronavirus more transmissible.

It took just 20 minutes after the opening in equity markets to sink, DJIA opened +124 at 10 am -111. Treasuries and MBSs will be focused on the stock indexes today, if stocks swoon it will support the bond and mortgage markets. So far this morning both markets are sowing very little movement. The last few days we’ve had large swings in MBS prices in the afternoon.

PRICES @ 10:00 AM

10 yr. note: 1.45% +1 bp

5 yr. note: 1.23% +2 bp

2 Yr. note: 0.65% +2 bp

30 yr. bond: 1.77% +2 bp

Libor Rates: 1 mo. 0.103%; 3 mo. 0.180%; 6 mo. 0.268%; 1 yr. 0.455% (12/2/21)

30 yr. FNMA 3.0: @9:30 am 103.66 -5 bp (-14 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.14 -12 b p (-30 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.92 -37 bp (-27 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3753 -$0.0018

Dollar/Yen: 113.35 +0.17 yen

Dollar/Euro: $1.1295 -$0.0008

Dollar Index: 96.31 +0.16

Gold: $1771.80 +$9.10

Bitcoin: 56,295 -609

Crude Oil: $68.90 +$2.41

DJIA: 34,528 -100

NASDAQ: 15,176 -205

S&P 500: 4552 -25

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 3rd, 2021 8:46 AM

Daily Market Analysis

Equity markets took another strong hit yesterday pushing more buying of treasuries, the DJIA -462 traded in a 700 point range yesterday, opening stronger then rolling over through the afternoon. The 10 yr. ended down 4 bps at 1.41% and MBS prices increased 25 bps with a lot of lenders repricing in the afternoon after the stock indexes came under pressure. This morning the indexes traded better in the futures markets prior to the 9:30 am ET open, the 10 at 9 am 1.42% +1 bp, MBSs -17 bps.

The only scheduled economic report today, weekly jobless claims at 8:30 am; claims expected at 245K, as reported +222k, up 28K from the week before. No reaction to the slight increase. The smaller-than-expected rise in claims suggests additional progress in the job market. At the same time, seasonal adjustment difficulties are likely to persist into the new year, making the figures tricky to interpret.

A few weeks back it was the delta variant that shook markets, that kind of ebbed as the severity wasn’t as bad as nervous markets were expecting. Now its omicron and once again the worry has driven stocks to near panic. The major contributor to the recent market volatility is that overall the equity markets had become severely over-valued with outlooks so pristine that anything that potentially interfere with the bullish view creates a revolving reaction. The signs were there that greed had exceeded reality. Take a few weeks ago; a new electric truck company, Rivian, went public at an IPO valuation of $120B, more than the total valuation of Ford and GM combined, so far the company hasn’t rolled off any trucks, that is extreme optimism that defines the present condition of the markets.

At 9:30 am the DJIA opened +204, NASDAQ -37, S&P +7. 10 yr. note 1.42% +1 bp. FNMA 2.5 30 yr. coupon at 9:30 am -14 bps, from 9:30 am yesterday +17 bps.

There are no more data points today, no key political remarks or Fed comments that will have direct influence on trading today. Tomorrow the employment data for November. Possibly more news about omicron.

Daily market volatility continues, a 700 point range in the DJIA yesterday flipping from a 300 point gain in the morning to -462. Mortgage markets improved as stocks crumbled from -6 bp at 9:30 am to end the day +25. The 10 yr. note yield is going to head higher once equity markets calm down. So far this morning the 10 yr. at 1.46% last night dropped to 1.41%, as we hit the send tab the 10 climbing back to 1.44% and MBS prices -20 bps at 10 am, 6 lower than 9:30 am.

PRICES @ 10:00 AM

10 yr. note: 1.44% +3 bp

5 yr. note: 1.20% +6 bp

2 Yr. note: 0.62% +6 bp

30 yr. bond: 1.76% +2 bp

Libor Rates: 1 mo. 0.102%; 3 mo. 0.174%; 6 mo. 0.269%; 1 yr. 0.458% (12/1/21)

30 yr. FNMA 3.0: @9:30 am 103.80 -5 bp (+16 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.44 -14 bp (+17 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.19 -45 bp (+16 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3763 +$0.0082

Dollar/Yen: 112.95 +0.17 yen

Dollar/Euro: $1.1341 +$0.0020

Dollar Index: 95.85 -0.18

Gold: $1769.80 -$15.50

Bitcoin: 57,338 +352

Crude Oil: $64.68 -$0.89

DJIA: 34,490 +458

NASDAQ: 15,392 +138

S&P 500: 4566 +53

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 2nd, 2021 9:17 AM

Daily Market Analysis

The stock market was slammed yesterday, partly due to Jerome Powell's surprising announcement that the Fed would increase the speed of the tapering plan previously announced and finally put an end to the Fed’s use of transitory to define the current inflation climb. Powell at the Senate Banking Committee said the FOMC will discuss moving quicker to end its $120B a month purchases of treasuries and MBSs, the plan was reducing by $15B a month so the end would happen next June. Now Powell wants it over sooner, possibly by March or April 2022 to open the door to increase the FF rate. The pickup in inflation rates around the world will be longer-lasting and sharper than previously anticipated, with a growing risk that households and businesses grow accustomed to faster price rises. Releasing the last of its four reports on the economic outlook this year, the OECD said it now expects consumer-price inflation in the U.S. to average 4.4% in 2022, up from 3.1% when it last released forecasts in September. It said it now expects inflation in the Eurozone to be 2.7%, up from 1.9%. The new forecasts were made before the discovery of the Omicron variant. Today Powell will go back the Congress this time to the House Financial Services Committee.

At 8:15 am ET ADP reported private jobs in November increased 534K, the estimates were for 525K. MBS prices traded down 8 bps on the report then recovered to unchanged, the 10 yr. note was up 4 bps at 1.48% after hitting 1.50% overnight. Stock indexes at 9 am were better, the DJIA lost 653 yesterday this morning +316.

Weekly MBA mortgage applications last week, it was Thanksgiving Week, so we don’t put a lot attention to it. The composite -7.2%, purchase apps +5.0% but re-finances were down 15.0% from the previous week.

At 9:30 am the DJIA opened +290, NASDAQ +214, S&P +55. 10 yr. at 9:30 am 1.48% +4 bp. FNMA 2.5 30 yr. coupon -6 bps from yesterday’s close and 53 bps lower than 9:30 am yesterday.

At 10 am November ISM manufacturing index was thought to be 61.1 from 60.8 in October, the index spot on at 61.1. October construction spending +0.2% against forecasts of +0.6%.

At 10 am Jerome Powell scheduled to testify at the House Financial Services Committee.

Later this afternoon (2 pm) the Fed’s Beige Book.

PRICES @ 10 AM

10 yr. note: 1.48% +4 bp

5 yr. note: 1.20% +4 bp

2 Yr. note: 0.59% +2 bp

30 yr. bond: 1.82% +3 bp

Libor Rates: 1 mo. 0.094%; 3 mo. 0.173%; 6 mo. 0.243%; 1 yr. 0.382% (11/30/21)

30 yr. FNMA 3.0: @9:30 am 103.66 -5 bp (-28 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.27 -6 bp (-53 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.03 -23 bp (-67 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3685 +$0.0042

Dollar/Yen: 112.92 -0.24 yen

Dollar/Euro: $1.1348 +$0.0009

Dollar Index: 95.77 -0.22

Gold: $1787.90 +$11.40

Bitcoin: 58,393 +913

Crude Oil: $68.39 +$2.21

DJIA: 34,817 +333

NASDAQ: 15,752 +214

S&P 500: 4630 +63

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on December 1st, 2021 9:15 AM
News Release as reported by fhfa.gov 11/30/2021: 

FHFA Announces Conforming Loan Limits for 2022

Baseline Conforming Loan Limit Will Increase to $647,200

FOR IMMEDIATE RELEASE
11/30/2021

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced the conforming loan limits (CLLs) for mortgages to be acquired by Fannie Mae and Freddie Mac (the Enterprises) in 2022. In most of the U.S., the 2022 CLL for one-unit properties will be $647,200, an increase of $98,950 from $548,250 in 2021. 

National Baseline

The Housing and Economic Recovery Act (HERA) requires that the baseline CLL for the Enterprises be adjusted each year to reflect the change in the average U.S. home price. Earlier today, FHFA published its third quarter 2021 FHFA House Price Index® (FHFA HPI®) report, which includes statistics for the increase in the average U.S. home value over the last four quarters. According to the nominal, seasonally adjusted, expanded-data FHFA HPI, house prices increased 18.05 percent, on average, between the third quarters of 2020 and 2021. Therefore, the baseline CLL in 2022 will increase by the same percentage. 

High-Cost Area Limits

For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the applicable loan limit will be higher than the baseline loan limit. HERA establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting a "ceiling" at 150 percent of the baseline limit. Median home values generally increased in high-cost areas in 2021, which increased their CLL. The new ceiling loan limit for one-unit properties will be $970,800, which is 150 percent of $647,200. 

Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $970,800 for one-unit properties.  

Due to rising home values, the CLLs will be higher in all but four U.S. counties or county equivalents.   

Other Resources

###

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 30th, 2021 3:00 PM

Daily Market Analysis

After Friday’s market turmoil yesterday saw some settling, stocks increased, and interest rates edged higher. Most news about omicron yesterday was more upbeat, the variant isn’t as deadly as delta or COVID, infections don’t last long and the recovery is quicker. Yesterday it was believed that the present vaccines would be sufficient, Moderna saying not really. Top executives reiterated that the omicron variant’s many mutations suggest new vaccines will be needed, triggering a drop in financial markets. “The number of mutations on this virus are surprising,” co-founder Noubar Afeyan said in a Bloomberg Television interview. “We have to take it for the serious threat that it poses.” Chief Executive Officer Stephane Bancel, in an interview with the Financial Times, predicted a “material drop” in the existing shots’ efficacy and damped expectations new ones could be ready soon. Early this morning the DJIA traded down 400 points, the 10 yr. note at 5:30 am ET 1.42% -10 bps; investors flooding to safety while equity portfolios are being hit hard.

Later today (10 am ET) Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen will begin two days of testimony at Senate Banking Committee. In his prepared testimony Powell said the omicron variant of the coronavirus, poses risks to both sides of the central bank’s mandate to achieve stable prices and maximum employment. “The recent rise in Covid-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,”... “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.” The testimonies of Powell and Yellen were scheduled at the Senate Banking Committee prior to the omicron revelation. Tomorrow the pair will go the House Financial Services Committee.

At 9 am this morning the Sept Case/Shiller home price index was +1.2% as expected, yr./yr. also as forecast at +19.5%. In another Sept house price index, the FHFA reported prices increased 0.9%, also as expected, yr./yr. +17.7%.

At 9:30 am the DJIA opened -282, NASDAQ -65, S&P -31. 10 yr. at 9:30 am 1.44% -6 bps. FNMA 2.5 30 yr. coupon at 9:30 am +23 bps and +57 bps from 9:30 am yesterday.

At 9:45 am November Chicago purchasing mgrs. index, expected at 68.4 unchanged from October, as released the index fell to 61.8. the lowest since last February.

At 10 am November Conference Board’s consumer confidence index thought to be at 110.7 from 113.8 in October, the index 109.5, the lowest since February. Present Situation Consumers’ appraisal of current business conditions was less favorable in November. 17.0% of consumers said business conditions are “good,” down from 18.3%. 29.0% of consumers said business conditions are “bad,” up from 25.7%. Consumers’ assessment of the labor market was moderately more favorable.

58.0% of consumers said jobs are “plentiful,” up from 54.8%. Conversely, 11.1% of consumers said jobs are “hard to get,” virtually unchanged from 11.0%. Consumers’ optimism about the short-term business conditions outlook increased in November.

24.1% of consumers expect business conditions will improve, up from 22.7%. 20.7% expect business conditions to worsen, down from 21.9%. Consumers were less optimistic about the short-term labor market outlook. 22.1% of consumers expect more jobs to be available in the months ahead, down from 24.4%. 18.9% anticipate fewer jobs, up slightly from 18.7%.

Speculation about the impact of the new strain is all over the map with little yet known. Most comments we are reading, and hearing is it will slow economic growth for a while but won’t lead to an economic contraction. “It takes a boom into a boomlet,” said Diane Swonk, chief economist at accounting and advisory firm Grant Thornton LLP. “We’ve got a lot of momentum coming in and that helps.” Oxford Economics said it would likely project global gross domestic product to grow 4.2% next year, down a little from its prior estimate of 4.5%.

PRICES @ 10:00 AM

10 yr. note: 1.44% -7 bp

5 yr. note: 1.10% -5 bp

2 Yr. note: 0.45% -3 bp

30 yr. bond: 1.81% -5 bp

Libor Rates: 1 mo. 0.099%; 3 mo. 0.170%; 6 mo. 0.246%; 1 yr. 0.419% (11/29/21)

30 yr. FNMA 3.0: @9:30 am 103.94 +14 bp (+25 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.80 +23 bp (+57 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.70 +16 bp (+53 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3698 -$0.0183

Dollar/Yen: 112.57 -0.96 yen

Dollar/Euro: $1.1381 +$0.87

Dollar Index: 95.64 -0.70

Gold: $1798.40 +$16.10

Bitcoin: 58,172 +53

Crude Oil: $67.33 -$2.62

DJIA: 34,835 -301

NASDAQ: 15,799 +17

S&P 500: 4636 -19

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 30th, 2021 9:10 AM

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Higher

Higher

High
(by Sigma Research)
Realtor Report

Nothing is forever, including what older Americans call home.

It seems millennials are not the first generation to live “in the moment.” Boomers and those slightly younger are finding it no great loss to change their minds about their “forever homes” to something smaller, different, or even in an alternate locale.

Wall Street Journal’s Beth Decarbo reports on how many couples near or in retirement embark on a quest to find the perfect place to spend their twilight years, but go on to realize that what’s perfect now may be less than ideal later. “Poor health and dwindling finances are obvious reasons some seniors choose to move,” says DeCarbo. “Other retirees retool their priorities when they realize how much they miss the grandchildren or hate their new neighborhood.”

Because, life. It just happens. And most home buyers don’t stay in their homes as long as they think they will, according to Jessica Lautz, vice president of demographics and behavioral insights with the National Association of Realtors. The survey, released earlier this year, asked recent home buyers to list factors that would compel them to move. Marriage, birth, or retirement were cited as the top reason by 25% of the respondents aged 56 to 65 and 16% of respondents 66 to 74. “The second-most common reason was a household member’s health, cited by 14% of respondents 56 to 65 and 25% of those 66 to 74,” says deCarbo. “The third top reason, for both age groups, was downsizing to a smaller house.”

Moving even every few decades, however, carries a big price tag, which is why some experts urge buyers to learn as much as they can about a new location before shelling out for a home. DeCarbo quotes Mike Leverty, a Wisconsin-based financial advisor: “It’s OK to take a couple of years to explore other areas and not jump in immediately.” He advises his clients to rent in the area where they think they want to live, even if it is only part time. “You really have to view it as a second home and not a vacation,” he says. “Factor in amenities like shopping and healthcare—things you wouldn’t think about if you just vacationed there for a couple of weeks.”

To illustrate this point, DeCarbo tells the story of a couple that had found what they thought was their first forever home in Southport, N.C., and paid about $200,000 for land and another $400,000 to build the house. But the nearest big city was more than 30 minutes away, and they began to feel isolated after having been accustomed to good restaurants and nearby theaters.

The couple subsequently took a trip to Asheville, N.C., for a tennis tournament, after which they realized Asheville offered the best of both worlds—the trappings of city life and the outdoor activities in the beautiful Blue Ridge Mountains. So, they sold their Southport home for $480,000 in 2016. The casualty of all this was getting clobbered on the purchase price of the lot, the value of which had fallen about 50% since they bought it.

After the couple built their second forever home, they took part-time jobs, volunteered and pursued their hobbies. Despite loving the area, however, they had a tough time breaking into the social arena. So they began to be open to yet a third forever home possibility. Their current forever home is located in a sprawling 55+ community in central Florida, where they now golf, and play softball and pickleball, among other pursuits, including fostering puppies.

The couple insists they have no regrets, however, and that their past home-buying adventures were valuable because they led them to where they are now. Will they stay put? No guesses.

Other retirees leave what they once believed was their forever home because the cost of living in their locale has begun to skyrocket. Then, when they experience the weather or location they chose next was less than optimum, they’ll move yet again. They’ll swear no one told them about freezing winds, intense storms, nothing in common with the residents there, or the political persuasions not at all matching their own.

Downsizing sounds great at first. Kids go off to college, get married, or move away and older homeowners feel they are wandering around listening to the echoes of their own footsteps. So perhaps they move closer to town, where they were willing to live in less square footage with no yard, but at a higher price per square foot. Now they pay less per year in taxes, upkeep, utilities and lawn care. But do they commit? Not always. They may have purchased a house with stairs they no longer wish to scale or one too far from the grandchildren who didn’t exist when they downsized. And they move yet again.

In the end, sometimes a forever home is not forever.

WSJ, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market improved by +9 bps last week. This was not enough to improve mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Covid, 2) Jobs and 3) The Fed.

1) Covid: We saw a huge (+74BPS) gain on Friday due to news of the new Omicron variant. Besides the obvious health concerns, the markets are focused on the potential for renewed lockdowns, travel restrictions and overseas factory closures which could provide a very strong headwind to our economic recovery.

2) Jobs: We have a large plate of job and wage related data to digest this week which will culminate in Big Jobs Friday with the Unemployment Rate, Non Farm Payrolls and most importantly, Average Hourly Earnings.

3) The Fed: We will hear from several major Central Bankers this week. We hear from our own Fed Chair Powell on Tuesday and get our Beige Book on Wednesday. The bond market will continue to struggle with trying to handicap what the Fed may or may not do to the pace of the Taper at the December FOMC meeting.

This Week's Potential Volatility: High

This morning we're seeing a step back from Friday's panic buying. Volatility is high as markets keep an eye out for news on Omicron.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 29th, 2021 9:52 AM

Daily Market Analysis

Stocks and bonds experienced huge moves last Friday, driven by the new variant of COVID, named Omicron. DJIA -905, 10 yr. note yield 1.48% -16 bps, MBS prices +77 bps. This morning some rebounds, the 10 began the day at 1.54% +6 bps and MBS prices -20 bps. DJIA at 9 am ET +355. Crude oil fell $11.00 Friday, early trade this morning +$4.30.

At 9:30 am ET the DJIA opened +364, NASDAQ +235, S&P +58. 10 yr. 1.56% +8 bps recovering half the decline on Friday. MBS prices on Friday gained 77 bps, at 9:30 am FNMA 2.5 30 yr. coupon -23 bps and from 9:30 am Friday +1 bp. Last Friday crude oil declined $11.00, at 9:30 am +$4.20.

At 10 am October pending home sales, expected to have increased 0.7% from Sept, as reported sales jumped 7.5%. Buyers moving quickly to capture interest rates as they continued to increase.

The new COVID variant reported last week rattled global markets, just when the delta variant has become understandable a new one crops up. People infected by omicron in South Africa are showing very different symptoms to those suffering from the delta strain. The World Health Organization is analyzing the new mutation and has said it’s too early to say how transmissible and severe it is. It’s called on countries to start testing widely for omicron, saying the divergent design could fuel future surges of Covid-19. Scientists advising South Africa’s government told a media briefing today that while omicron appeared to be more transmissible, cases appear to be very mild.

On the inflation concerns: Allianz SE’s Mohamed El-Erian urged the Federal Reserve to acknowledge that inflation isn’t transitory and “ease your foot off the accelerator starting now.” El-Erian, who expressed support for Lael Brainard over renominated Fed Chair Jerome Powell, said on “Fox News Sunday” that a new person in charge of the U.S. central bank might have found it easier to change course. “Inflation is not transitory and it’s really important for the Fed to realize this,” he said. We have continually said here that inflation isn’t “transitory” as the Fed has constantly espoused, the best we can see is inflation levels will level off next year but will but decline unless the Fed changes its slow response. El-Erian has repeatedly said the Fed is underestimating inflation risks as the U.S. economic recovery.

This week promises to be a volatile one. Presently there isn’t enough known about the new variant that will continue to evolve through the week. On Friday the Nov employment data, will it matter as much given the current situation? It is Nov data that preceded the current new worries. How will investors confront the unexpected news? Leverage in the equity markets was on full display last Friday, as prices dropped the algorithms triggered margin calls that added to the selling pressures; interest rates fell as those trading platforms drove strong buying to safe treasuries. Tomorrow both Powell and Yellen will be speaking.

PRICES @ 10 AM

10 yr. note: 1.55% +7 bp

5 yr. note: 1.22% +6 bp

2 Yr. note: 0.53% +3 bp

30 yr. bond: 1.89% +6 bp

Libor Rates: 1 mo. 0.090%; 3 mo. 0.175%; 6 mo. 0.246%; 1 yr. 0.410% (11/26/21)

30 yr. FNMA 3.0: @9:30 am 103.69 -5 bp (+3 bp from 9:30 am Friday)

30 yr. FNMA 2.5: @9:30 am 102.23 -27 bp (+1 bp from 9:30 am Friday)

30 yr. GNMA 2.5: @9:30 am 102.17 -23 bp (-3 bp from 9:30 am Friday)

Dollar/Yuan: $6.3863 -$0.0067

Dollar/Yen: 113.83 +0.47 yen

Dollar/Euro: $1.1265 -$0.0052

Dollar Index: 96.36 +0.27

Gold: $1787.20 +$1.70

Bitcoin: 57,042 +2,106

Crude Oil: $72.29 +$4.14

DJIA: 34,999 +100

NASDAQ: 15,725 +233

S&P 500: 4637 +43

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 29th, 2021 9:42 AM

Daily Market Analysis

A new variant of the COVID virus was discovered in South Africa. Fears that the strain could fuel outbreaks in many countries and pressure health systems, potentially evading vaccines and complicating efforts to reopen economies and borders sent a wave of risk aversion across global markets Friday. U.S. stock futures, European equity indexes and crude oil tumbled while Treasuries rallied. Governments around the world have started issuing bans on travelers from South Africa and nearby countries. Researchers are still trying to determine whether it is more transmissible or more lethal than previous strains. Dozens of countries restricted travel to and from southern Africa, while a case was confirmed in Belgium.

The reaction has been panic. Pre-open stock futures, DJIA -800, NASDAQ -150 , S&P -75. At 9 am 10 yr. note yield down 10 bps from Wednesday, MBS prices +44 bps, crude oil -$4.41, gold +$20.00.

There are no economic data today. The stock market will close at 1 pm, the bond market at 2 pm.

From Wednesday’s high at 1.70% to 1.53% this morning on the 10.

At 9:30 am the DJIA opened -810, NASDAQ -178, S&P -70. 10 yr. 1.53% -11 bps. FNMA 2.5 30 yr. coupon at 9:30 am +48 bps and +50 bps from 9:30 am Friday.

Recently we have warned of increased market volatility; what we have this morning isn’t anything we or anyone expected last Wednesday. 48 hours ago, no one knew about the new strain that has really upset US and global markets. When a shock hits over-extended markets the reactions to a surprise can be excessive. Whether this new strain is as dangerous as markets think now isn’t understood yet. Money markets are offloading bets on central bank interest-rate hikes in a hurry, as inflation fears give way to concerns that a new coronavirus strain may spread globally and slow economic growth. The timing of a first 25-basis-point rate increase by the Federal Reserve has moved to September from June, while briefly pricing out any more hikes unit 2023. It’s a similar story in the U.K. where the Bank of England is now expected to tighten policy in February instead of next month. The World Health Organization still trying to determine whether it is more transmissible or more lethal than previous strains.

PRICES @ 10:00 AM

10 yr. note: 1.51% -13 bp

5 yr. note: 1.18% -16 bp

2 Yr. note: 0.52% -13 bp

30 yr. bond: 1.87% -10 bp

Libor Rates: 1 mo. 0.093%; 3 mo. 0.175%;6 mo. 0.259%; 1 yr. 0.471% (11/25/21)

30 yr. FNMA 3.0: @9:30 am 103.66 +19 bp (+22 bp from 9:30 am Wednesday)

30 yr. FNMA 2.5: @9:30 am 102.22 +48 bp (+50 bp from 9:30 am Wednesday)

30 yr. GNMA 2.5: @9:30 am 102.20 +50 bp (+44 bp from 9:30 am Wednesday)

Dollar/Yuan: $6.3924 +$0.0055

Dollar/Yen: 113.58 -1.79 yen

Dollar/Euro: $1.1291 +$0.0082

Dollar Index: 96.21 -0.56

Gold: $1799.60 +$15.30

Bitcoin: 54,693 -4,141

Crude Oil: $72.39 -$6.00

DJIA: 34,886 -918

NASDAQ: 15,617 -228

S&P 500: 4614 -87

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 26th, 2021 9:46 AM

Daily Market Analysis

8:30 am ET economic releases. Q3 preliminary GDP expected +2.1% and +2.1% is what we got. Weekly jobless claims dropped more than expected to 199K against estimates of 264K and down 71K from the prior week. Oct durable goods orders fell -0.5% on forecasts of +0.3%; excluding transportation orders +0.5% as expected, core capital goods expected +0.6% and reported +0.6%. Combined, the three reports didn’t move the interest rate markets or MBS prices, no change from yesterday at 9 am.

For the first time since the pandemic began weekly claims were less than prior to the lockdowns. The decline, along with near-record levels of job openings, signals strengthening demand for labor, according to the pundits talking this morning, the U.S. economy is still missing more than four million jobs compared with February 2020. As of mid-November, job postings on Indeed, a job-search site, were 52% above where they were ahead of the pandemic in February 2020, after adjusting for seasonal variation. Claims at the lowest level since 1969.

Earlier this morning MBA reported last week’s mortgage applications; the composite increased 1.8% after dropping 2.8% the week before; purchase application +5.0% and re-finance apps +0.4%.

October US trade deficit was expected -$94.6B, as reported -$82.9B. Imports +0.5% while exports increased 10.7%. Nice to see for a change.

At 9:30 am the DJIA opened -217, NASDAQ -117, S&P -24. 10 yr. note 1.68% +1 bp. FNMA 2.5 30 yr. coupon at 9:30 am -11 bps and -22 bps from 9:30 am yesterday. Normally the 9:30 am levels are what lenders set prices against; today it’s the data at 10 am that will drive the rest of the session. Traders didn’t wait for the 10 am data, pushing MBS prices down 17 bps at 9:45 am, 6 bps weaker than 9:30 am.

At 10 am October personal income, spending and PCE. Income expected +0.2%, spending +1.0%, PCE estimate +0.6%m/m and +5.0 yr./yr., core PCE thought to be +0.4% m/m and +4.1% yr./yr. As reported income increased 0.5%, spending +1.3%. Monthly PCE +0.6%, yr./yr. +5.0%; core PCE m/m +0.4% and yr./yr. +4.1%. Inflation continues to hold, this data right on forecasts that were estimated higher than in Sept.

Also, at 10 am October new home sales, expected 790K reported at 745K, Sept was revised to 742K from 800K originally reported. We will have details tis afternoon.

Finally, at 10 am the final November U. of Michigan consumer sentiment index was expected at 66.9, as released 67.4, still one of the lowest readings recently.

After all the data this morning there isn’t anything else on the schedule for the bond market to focus on until next week. Tomorrow closed for Thanksgiving; Friday the stock market will close at 1 pm, the bond market at 2 pm.

Crude prices rose yesterday after the Biden Administration announced that the U.S. and other countries would tap their petroleum reserves. Markets know that this political gesture won’t fix the supply shortage and could make it worse. Opening the SPR to release 50B of oil has fallen on blind eyes, +over $2.00 yesterday and unchanged this morning. Oil traders expect the Organization of the Petroleum Exporting Countries and Russia to respond in kind at their next meeting in December by reducing supply.

After all 10 am data the 10 yr. was holding at unchanged from yesterday at 1.68%. MBS prices though continued to slip, down 22 bps and -11 bps from 9:30 am.

The 10 yr. note is destined to increase to 1.75%, the high set in early April.

PRICES @ 10:15 AM

10 yr. note: 1.67% -1 bp

5 yr. note: 1.37% +3 bp

2 Yr. note: 0.65% +2 bp

30 yr. bond: 2.02% -2 bp

Libor Rates: 1 mo. 0.092%; 3 mo. 0.178%; 6 mo. 0.252%; 1 yr. 0.449% (11/23/21)

30 yr. FNMA 3.0: @9:30 am 103.44 -12 bp (-17 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 101.72 -11 bp (-22 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 101.72 -8 bp (-20 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3919 unch

Dollar/Yen: 115.34 +0.22 yen

Dollar/Euro: $1.1202 -$0.0046

Dollar Index: 96.82 +0.33

Gold: $1782.30 -$1.50

Bitcoin: 56,118 -1,509

Crude Oil: $78.41 -$0.09

DJIA: 35,659 -155

NASDAQ: 15,656 -119

S&P 500: 4671 -20

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 24th, 2021 9:34 AM

Daily Market Analysis

Stock indexes not much changed at 8:30 am ET.

There are no economic releases today that will attract traders; at 1 pm Treasury will sell $59B of 7 yr. notes, yesterday both the 2 and 5 auctions were not well bid.

The news today; The U.S. and several other countries will tap their national strategic petroleum reserves, senior Biden administration officials said, in an attempt to bring down rising gasoline prices. The U.S. will release 50 million barrels, other countries participating in the release include China, India, Japan, South Korea and the U.K. Crude oil prices began the day up $0.13. Don’t look for gas prices to fall quickly, there is always a lag between the price of crude and when it hits the pumps. Global consumption is likely to average 100 million barrels a day in the final three months of the year, up 4.9% from the same period a year ago, according to Energy Department figures.

Biden’s picks for the Fed announced yesterday signals continued monetary continuity, but levels the question about what the Fed may do about additional regulations on banks. Senate progressives like Senator Warren not happy with the re-appointment of Powell. Fed watchers focusing on who Biden will appoint to succeed Randal Quarles, the departing central bank governor who served as its regulatory point man until last month. The Trump administration eased some banking regulations that Democrats want to tighten down; much of it is said to center on bank mergers. Worrying about bank regulations is beside the point; how and when will the Fed act to bring down inflation that Powell so mis-judged six month ago. Markets increasingly believing the Fed will be forced to raise rates as soon as next June or July, the anticipation of higher FF rates is slowly being discounted across the yield curve.

A few months ago, John Deere employees walked off the job to strike over wages; the strike has been settled but it was the beginning of workers standing up and pressing grievances by walking off at a time that is critical for the inflation outlooks. We noted then that wage pressures would escalate. The current star of strikes is Starbucks’ workers.  Beside workers at Deere & Co. , Kellogg Co. and Mondelez International Inc. have gone on strike at various points this year. These standoffs have also come amid a tight labor market where many businesses have struggled to grow their ranks. Most focus on inflation is about increasing prices, wage pressures are growing to add to the inflation outlook. Back in July the spread between the 5 yr. and 10 yr. note stood at 84 bps to the 10; this morning that spread is just 30 bps; pricing in Fed rate hikes.

At 9:30 am the DJIA opened +30, NASDAQ -36, S&P unchanged. 10 yr. note 1.65% +2 bp. FNMA 2.5 30 yr. coupon at 9:30 am -8 bps and -26 bps from 9:30 am yesterday (most every lender re-priced lower yesterday afternoon). Yesterday the DJIA dropped 300 bps from 2:30 pm to the 4 pm close, the dollar increased, and gold fell $31.00: a broad volatile session yesterday.

At 1 pm $59B 7 yr. note auction.

No data of consequence today but tomorrow there will be plenty to be concerned about. The main attention will be on the October income and spending that includes Powell’s favorite inflation indicator, the personal consumption expenditures (PCE), the current estimates are not encouraging (PCE m/m +1.0% from +0.6% in Sept, yr./yr. +5.0% from 4.4% in Sept.; the core PCE ex food and energy m/m +0.4% from +0.2%, yr./yr. core +4.1% up from 3.6% in Sept. Other data tomorrow; weekly jobless claims, Q3 GDP, Oct durable goods orders, Oct new home sales. U. of Michigan consumer sentiment index.

PRICES @ 10:00 AM

10 yr. note: 1.65% +2 bp

5 yr. note: 1.34% +1 bp

2 Yr. note: 0.63% unch

30 yr. bond: 2.00% +3 bp

Libor Rates: 1 mo. 0.092%; 3 mo. 0.169%; 6 mo. 0.243%; 1 yr. 0.425% (11/22/21)

30 yr. FNMA 3.0: @9:30 am 103.61 -8 bp (-23 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 101.94 -8 bp (-26 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 101.92 -12 bp (-28 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3919 +$0.0065

Dollar/Yen: 115.05 +0.17 yen

Dollar/Euro: $1.1245 +$0.0011

Dollar Index: 96.53 -0.02

Gold: $1790.70 -$15.60

Bitcoin: 57,469 +1,411

Crude Oil: $78.55 +$1.80

DJIA: 35,669 +50

NASDAQ: 15,850 -5 bp

S&P 500: 4688 +5

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 23rd, 2021 9:13 AM

Archives:

Categories:

My Favorite Blogs:

Sites That Link to This Blog: