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Daily Market Analysis August 23, 2022

August 23rd, 2022 9:03 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

After the DJIA dropped 900+ points over the last two sessions this morning rather steady. Still many out there believe the Fed will not increase the FF rate by 75 bps but just by 50; traders however leaning toward 75. At 9 am ET the 10 yr. note yield at 3.07% +3 bps, MBS prices down 18 bps from yesterday’s close.

New data from Europe and Asia, output in the 19-nation euro zone declined for a second month in August as record energy and food inflation saps demand and more sectors succumb to the darkening outlook. In Asia, Japanese output shrank as a resurgence in Covid-19 cases further depresses demand that was already struggling under the weight of surging inflation. The global outlook is dire with winter coming and Europe likely to drop deeper into recession that may add to the recession outlook here in the US. Even France that has been holding up well is weakening for the first time in a year and a half. Germany posting the sharpest decline in output since June 2020 as it rushes to reduce dependence on Russian natural gas. In China, the government’s ongoing commitment to Covid Zero and a worsening real-estate slump are weighing on consumer and business confidence. In the US we are doing much better, but we are left with the question, can the US avoid recession if the rest of the world succumbs?

Until Powell speaks on Friday morning US interest rates shouldn’t increase much more; his comments about what the Fed is thinking and may possibly do will set the tone for the next major move. As is usual he will speak in Fedspeak language and it will be left to traders to interpret what he means.

At 9:30 am the DJIA opened -20, NASDQQ +30, S&P +3. 10 yr. 3.06% +3 bps. FNMA 4.5 30 yr. coupon at 9:30 am -14 bps and -27 bp from 9:30 am yesterday. FNMA 5.0 30 yr. coupon -22 bps and -25 bp from 9:30 am yesterday.

At 9:45 am August preliminary PMI index was expected at 49.2 from 47.7 in June as released 45.0; manufacturing expected at 51.8 from 52.2 in June hit at 51.3, the service sector expected at 49.0 from 47.3 dropped to 44.1. (Any number under 50 is contraction)

At 10 am July new home sales were expected at 575K from 590K in June. As released sales dropped to 511K and June revised to 585K.

At 1 pm Treasury will auction $44B of 2 yr. notes.

Over the last three weeks the 10 yr. note has increased from 2.56% to this morning at 3.06%, 50 bp or one half of a percent, mortgage rates have jumped 47 bps. Already this morning some volatility; the 10 yield at 10 am 3.04% +1 bp after trading at 3.06% at 9:30 am; MBS prices at 9:30 am -17, at 10 am -5 bps.

PRICES @ 10:00 AM

10 yr note: 3.04% +1 bp

5 yr note: 3.15% -1 bp

2 Yr note: 3.26% -5 bp

30 yr bond: 3.27% +5 bp

Libor Rates: 1 mo 2.427%; 3 mo 2.980%; 6 mo 3.566%; 1 yr 4.032% (8/22/22)

30 yr FNMA 5.0: 101.09 -22 bp (-25 bp from 9:30 am yesterday)

30 yr FNMA 4.5: 99.81 -14 bp (-27 bp from 9:30 am yesterday)

30 yr GNMA 4.5: 100.44 -16 bp (-25 bp from 9:03 am yesterday)

Dollar/Yuan: $6.8442 -$0.0047

Dollar/Yen: 136.85 -0.66 yen

Dollar/Euro: $0.9986 +$0.0043

Dollar Index: 108.74 -0.31

Gold: $1753.10 +$4.70

Bitcoin: 21,430 +322

Crude Oil: $93.22 +$2.83 (Saudis threatening to cut output)

DJIA: 33,013 -50

NASDAQ: 12,414 +32

S&P 500: 4143 +6

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 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 August 23rd, 2022 9:03 AM

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