August 27th, 2021 10:12 AM by Richard Sardella MLO.100007700/NMLS 233568
Today’s key ingredient, Jerome Powell’s speech; markets have been thinking about it for two weeks. His speech scheduled for 10 am ET. Today's virtual Jackson Hole Economic Symposium will focus on the central bank's next moves on asset tapering, an issue that has grown more complicated with the emergence of the COVID-19 Delta variant and rising inflation. Under the theme of "Macroeconomic Policy in an Uneven Economy," delegates will also hear academic presentations on issues including monetary and fiscal policies in times of shock, as well as the virus's impact on the labor market and a broad appraisal of low interest rates.
A huge number of Treasury options expiring today may increase volatility after the chairman’s speech, with some Fed officials saying the time to start tapering stimulus is near. At a Fed meeting in July, most policy makers said it probably would be appropriate to begin paring asset purchases this year. Powell’s speech just released, MBS prices dropped 14 bps then rallied 14 bps.
At 8:30 am July personal income higher than forecasts +1.1% on estimates of +0.3%; personal consumption (spending) expected +0.5% increased 0.3%. The July PCE, the Fed preferred inflation reading +0.4% m/m as anticipated, yr./yr. +4.2% against +4.1% expectations and up from 4.0% in June. PCE core +0.3% m/m as expected and yr./yr. +3.6% slightly higher than +3.5% in June. That inflation in PCE didn’t increase much pushed the 10 yr. note from 1.35% yesterday to 1.33% at 9:00 am. MBS prices at 9:00 +14 bps from yesterday; the gains were quickly discarded. The slower spending growth suggests the recovery has lost momentum amid Delta variant uncertainty.
At 9:30 am the DJIA opened +46, NASDAQ +31, S&P +10. 10 yr. note 1.34%-1 bp. FNMA 2.0 30 yr. coupon at 9:30 am +3 bps from yesterday and +6 bps from 9:30 am yesterday.
At 10 am the final August U. of Michigan consumer sentiment index, forecasts were at 70.9 from 70.2 on the mid-month release. The mid-month index and the other components dropped significantly from July readings. As reported 70.3.
Interest rates already volatile this morning; MBSs ranged from +14 bps to -9 bps before 10 am. More volatility is likely.
PRICES @ 10:10 AM ET
10 yr. note: 1.33% -2 bp
5 yr. note: 0.83% -2 bp
2 Yr. note: 0.23% -1 bp
30 yr. bond: 1.92% -2 bp
Libor Rates: 1 mo. 0.084%; 63 mo. 0.120%; 6 mo. 0.157%; 1 yr. 0.235% (8/26/21)
30 yr. FNMA 2.0: @9:30 101.14 +3 bp (+6 bps from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 103.63 +8 bp (+4 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 103.19 +5 bp (+2 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4816 unch
Dollar/Yen: 110.17 +0.09 yen
Dollar/Euro: $1.1764 +$0.0012
Dollar Index: 93.14 +0.08
Gold: $1790.50 -$4.70
Bitcoin: 47,258 +345
Crude Oil: $68.78 +$1.36
DJIA: 35,398 +185
NASDAQ: 15,032 +87
S&P 500: 4495 +25
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.