August 18th, 2021 8:47 AM by Richard Sardella MLO.100007700/NMLS 233568
The day began with the 10 yr. and MBSs not much changed from yesterday; the pre-opening trading in stock indexes, a little lower.
At 8:30 am ET July housing starts and permits; starts didn’t meet forecasts expected at 1.61 mil starts were 1.534 mil. Permits were expected at 1.62 mil and exceeded it at 1.635 mil. Yesterday the NAHB August housing market index dropped to its lowest level in a year at 75 from 80 expectations. Current sales conditions fell 5 points to 81 and traffic of prospective buyers also fell 5 points to 60. Sales expectations in the next six months were unchanged at 81.
Weekly MBA mortgage applications last week -3.9% from the prior week, purchase apps -1.0%, re-finances -5.0%.
This afternoon at 2 pm the minutes from the last FOMC meeting will be released, always interesting. The subject for the Fed now is the plan to taper the monthly buying of treasuries and MBSs. The last two weeks Fed officials have sent messages that the pull back is coming, as soon as October or November and according to some of the comments from FOMC and Fed officials the plan would take 8 to 10 months to withdraw. The main voice, Jerome Powell, has yet to make any comments. The minutes released today may mention that a few members brought up the subject.
Yesterday Powell, at an education town hall said “It’s not yet clear whether the Delta strain will have important effects on the economy; we’ll have to see about that.” … “The Covid pandemic is still casting a shadow on economic activity. It is still very much with us. We can’t, you know, we can’t declare victory yet on that,” He didn’t comment on what is next for central bank policy or detail how he expected the economy to perform over coming months. He did say that the economy is unlikely to return to how it was before the pandemic, as sectors reorganize themselves, and added that some groups that were hard hit by the pandemic have yet to fully recover. Speaking at a separate event, Federal Reserve Bank of Minneapolis leader Neel Kashkari: “I was feeling really optimistic in June and July. It seemed like the light was on at the end of the tunnel, and this is soon to be over, and then the Delta variant emerged and it’s simply much more contagious,” … “It could lead to a more sluggish recovery if people are nervous,” Mr. Kashkari said.
At 9:30 am the DJIA opened -124, NASDAQ -8, S&P -9. 10 yr. 1.27% +1 bps. FNMA 2.0 30 yr. coupon at 9:30 am -3 bps from yesterday’s close and -16 bps from 9:30 am yesterday; the 2.5 coupon -2 bps and -11 bps from 9:30 am yesterday.
At 1 pm Treasury will auction $20B of 20 yr. bonds.
Next week the annual Kansas City Fed Jackson Hole summit with global central bankers and economists. Between now and then the Fed, including Powell isn’t likely to have a lot to say with any clarity.
No movement in the rate markets today, unless and we doubt it, there is something unexpected in the FOMC minutes this afternoon.
PRICES @ 10 AM
10 yr. note: 1.16% -3 bp
5 yr. note: 0.65% -5 bp
2 Yr. note: 0.35% -3 bp
30 yr. bond: 1.80% -2 bp
Libor Rates: 1 mo. 0.085%; 3 mo. 0.134%; 6 mo. 0.151%; 1 yr. 0.241% (7/19/21)
30 yr. FNMA 2.0: @9:30 102.08 +27 bp (+30 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 104.05 +19 bp (+25 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 103.48 -14 bp (-7 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4835 -$0.0070
Dollar/Yen: 109.56 +0.10 yen
Dollar/Euro: $1.1770 -$0.0030
Dollar Index: 93.12 +0.23
Gold: $1824.90 +$15.70
Bitcoin: 29,544 -1,144
Crude Oil: $66.04 -$0.38
DJIA: 34,453 +462
NASDAQ: 14,322 +47
S&P 500: 4297 +39
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.