August 16th, 2021 8:59 AM by Richard Sardella MLO.100007700/NMLS 233568
Stock indexes in pre-open trading slightly lower; the 10 yr. note started down 1 bps from Friday’s close but last night down 4 bps at mid-night. At 8:30 am ET the 10 at 1.28% -1 bp.
Over the weekend Afghanistan collapsed with the Taliban now in total control of the country; so far not much reaction to what last week was seen as inevitable.
There is a growing number of Fed officials getting on board now that the Fed should begin tapering of its debt beginning with plans at the Sept FOMC meeting (Sept 21 and 22). Some chatter increasing that the tapering may begin as soon as October or November but markets not directly reacting because so far Powell and Clarida have not made any comments, and they are the two that matters. Coming before the FOMC, the Jackson Hole economic summit where Powell will open the summit with what may be defining the Fed’s stance on tapering, inflation forecasts and his outlook about the Fed’s outlook for the economy with the Delta variant increasing quickly. Asian economies under stress from a resurgent pandemic and U.S. consumer sentiment near a decade low, investors are turning to signals from the Federal Reserve to sustain market momentum.
Last Friday’s U. of Michigan consumer sentiment index was the weakest in almost 10 yrs. Consumer sentiment index gives a reason to ask the question, how firm is the economic rebound? The preliminary sentiment index fell by 11 points to 70.2, the lowest since December 2011. The expectations gauge plummeted almost 14 points to 65.2, the lowest since October 2013. Only 36% of respondents expect a decline in the jobless rate, down from 52% the prior month, despite record job openings. Consumers also became decidedly downbeat about their income prospects. The gauge of expected personal finances fell to a seven-year low. The figure fell well short of all estimates in surveys of economists. The slump in confidence risks a more pronounced slowing in economic growth in the coming months should consumers rein in spending. The recent deterioration in sentiment highlights how rising prices and concerns about the delta variant’s potential impact on the economy are weighing on Americans.
The US Treasury debt ceiling is about to expire, Treasury is using various spending cuts to keep the government from default.
At 9:30 am the DJIA opened -112, NASDAQ -53, S&P -14. 10 yr. at 9:30 am 1.25% -4 bps. FNMA 2.0 30 yr. coupon at 9:30 am +16 bps and +38 bps from 9:30 am Friday; the 2.5 coupon at 9:30 am+11 bps and +23 bp from 9:30 am Friday.
The 10 nicely below its technical support at 1.30%, as long as it trades below 1.30% our technical models will remain bullish for lower rates. That said, with all of what lies ahead for interest rates the potential of increased volatility remains elevated.
PRICES @ 10 AM
10 yr. note: 1.24% -5 bp
5 yr. note: 0.73% -4 bp
2 Yr. note: 0.20% -1 bp
30 yr. bond: 1.89% -4 bp
Libor Rates: 1 mo. 0.092%; 3 mo. 0.124%; 6 mo. 0.156%; 1 yr. 0.238% (8/13/21)
30 yr. FNMA 2.0: 101.52 +16 bp (+38 bp from 9:30 am Friday)
30 yr. FNMA 2.5: 103.91 +11 bp (+23 bp from 9:30 am Friday)
30 yr. GNMA 2.5: 103.23 +2 bp (-7 bp from 9:30 am Friday)
Dollar/Yuan: $6.4762 -$0.0012
Dollar/Yen: 109.16 -0.45 yen
Dollar/Euro: $1.1780 -$0.0017
Dollar Index: 92.57 +0.05
Gold: $1786.70 +$8.50
Bitcoin: 46,517 +211
Crude Oil: $66.17 -$2.27
DJIA: 35,381 -134
NASDAQ: 14,469 -144
S&P 500: 4448 -20
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.