August 24th, 2021 9:30 AM by Richard Sardella MLO.100007700/NMLS 233568
MBS prices increased yesterday, the 10 note down just 1 bps to 1.25%. This morning at 9 am ET the 10 yr. note +1 bp back to 1.26%, MBS prices were unchanged from yesterday.
Biden to meet G-7 countries today in a virtual conference, attempting to talk Biden into extending the August 31st deadline for total withdrawal; in the meantime the Taliban is saying the deadline must be met. An end of August deadline effectively means the civilian evacuation will have to end earlier because of the need for time to get the military out. Removing foreigners and Afghans, whose ties to outside powers leave them vulnerable to Taliban reprisals, will be much harder once U.S. forces leave.
In the US the House is back in session. Nancy Pelosi and a group of centrist Democrats will resume talks today on how to advance Biden’s legislative agenda, after hours of negotiations failed to break a stalemate late Monday. At least 10 Democrats say they want to vote on the infrastructure bill now and will withhold their support for a resolution to unlock the budget process for the larger economic bill until the Senate-passed transportation and energy bill is up for a vote. In the meantime the Treasury budget has expired and Treasury is using extra efforts to continue to pay bills; according to Janet Yellen Treasury can go until October before it defaults on US debt. Pelosi has proposed holding off on passing the infrastructure bill until the larger economic package of social program spending is ready for consideration in the House, a process that could stretch well into the fall. Pelosi has pledged to bring up the infrastructure bill for a vote by Oct. 1. But there is no mechanism to enforce that promise, and part of the discussions involve how to secure that commitment.
At 9:30 am the DJIA opened +53, NASDAQ +53, S&P +7. 10 yr. at 9:30 am 1.27% +2 bps. FNMA 2.0 30 yr. coupon at 9:30 am -2 bps from yesterday and +18 bps from 9:30 am yesterday; the 2.5 coupon at 9:30 am -2 bps and +17 bps from 9:30 am yesterday. MBS prices began retreating about 9:45 am with the 10 yr. note looking weak, it increased to 1.28% +3 bps.
At 10 am July new home sales; estimates were for sales at 700K up from 676K in June. As reported sales increased to 708K and Jun was revised higher, from 676K to 701K.
At 1 pm Treasury will auction $60B of 2 yr. notes.
Technically the 10 has strong support at 1.30%, very near resistance at 1.22%, major resistance at 1.13%. Fundamentally, Thursday the virtual Jackson Hole symposium begins. Total focus in the markets (beside tapering) is what Powell is willing to say (admit) about the rapid increasing inflation rate, now at 5.4%. Inflation has been being downplayed by the Fed and particularly Jerome Powell as just a temporary blip that won’t last. Based on recent data inflation isn’t ebbing and now wage pressure is building quickly, in the service sector most small businesses are finally paying higher wages as competition increases for workers. There are 1 million job openings according to the recent JOLTS data, next month the extended unemployment benefits are set to expire. If wage increases at the low end of the income sector it isn’t if, but when, wage pressures move up across the board; followed by increasing prices in goods and services.
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.