August 19th, 2021 8:47 AM by Richard Sardella MLO.100007700/NMLS 233568
Three time early this morning (prior to 8:30 am ET) the 10 yr. note yield fell to 1.22% -5 bps from yesterday. At 8:30 am weekly jobless claims were lower than forecasts, at 348K against 360K and -29K from the previous week. It is the 4th week in a row claims have declined implying the labor market is improving. Continuing claims in all programs declined to 11.7 million in the week ended July 31. That compares to a high of about 32.8 million in June 2020. An increase in initial filings in the next few weeks could point to labor market weakness as the delta variant of Covid-19 spreads. The initial claim figures coincide with the survey week for the Labor Department’s monthly job report. The reaction to the lower claims boosted the 10 yr. note to 1.24%, still down 3 bps from yesterday. MBS prices at 9 am+6 bps.
Also at 8:30 am August Philadelphia Fed business index, expected at 25.0 from 21.9 in July, dropped to 19.4. It’s not much of market mover.
At 9:30 am the stock market is continuing its declines; the DJIA opened -231, NASDAQ -68, S&P -23. 10 yr. note 1.25% -2 bps. FNMA 2.0 30 yr. coupon at 9:30 am +9 bps and +13 bps from 9:30 am yesterday; the 2.5 coupon +5 bps and +7 bps from 9:30 am yesterday.
At 10 am July leading economic indicators (LEI) expected +0.8%, as reported +0.9%, the best since May.
Yesterday the minutes from the July FOMC meeting were released; the takeaway was some confirmation that the tapering of Fed monthly purchases of treasuries and MBSs, what markets were largely expecting, may begin before the end of the year. Traders and investors struggling with an overbought stock market, the increasing Delta cases, and slowing Chinese growth raise questions about whether the global economy can absorb the winding down of quantitative easing. That’s pushing them to buy protection against equity swings; although not by much.
Next week (8/26 – 8/28) the annual Jackson Hole economic summit; Powell will deliver the opening remarks. Until then it is unlikely interest rates will move much. That said, as long as the 10 yr. note holds below 1.30% the bias is on balance slightly friendly. MBS prices likely to stay in very narrow ranges.
PRICES @ 10:00 AM
10 yr. note: 1.25% -2 bp
5 yr. note: 0.76% -1 bp
2 Yr. note: 0.21% unch
30 yr. bond: 1.88% -2 bp
Libor Rates: 1 mo. 0.088%; 3 mo. 0.130%; 6 mo. 0.158%; 1 yr. 0.235% (8/18/21)
30 yr. FNMA 2.0: @9:30 103.36 +9 bp (+11 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 103.77 +5 bp (+7 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 103.30 -3 bp (+7 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4915 +40.0068
Dollar/Yen: 109.75 -0.02 yen
Dollar/Euro: $1.1700 -$0.0010
Dollar Index: 93.37 +0.23
Gold: $1768.00 +$1.60
Bitcoin: 44,942 -46
Crude Oil: $63.85 -$1.60
DJIA: 34,921 -40
NASDAQ: 14,501 -24
S&P 500: 4399 -1
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.