CHM Blog

Daily Market Analysis August 5, 2021

August 5th, 2021 8:50 AM by Richard Sardella MLO.100007700/NMLS 233568

Interest rate markets settled down this morning from a very volatile day yesterday. At 8:30 am ET the 10 at 1.18% unchanged but did increase to 1.20% overnight and returned to 1.20% at 10 am, MBS prices early this morning down 5 bps from yesterday’s close. Weekly jobless claims at 8:30 am were expected at 381K on the latest estimates (early this week the estimate was 400K), as released claims were 385K down 14K from the previous week. Continuing claims for state benefits fell to 2.93 million in the week ended July 24, a fresh pandemic low. Roughly half of U.S. governors have ended federal unemployment benefit programs created during the pandemic before their expiry in September, arguing the supplemental aid is making it harder for businesses to fill a record number of job openings. Lawsuits in some of those states challenging the governors’ legal authority to end the aid could restore the halted benefits until they officially expire.

There isn’t any significant market-moving news today after the turmoil and volatility yesterday. Yesterday the 10 yr. note dropped to exactly its low on July 20th , once there was no follow through and ahead of tomorrow’s July employment report investors and traders began adjusting strategies and flattened long positions that had been building over the last week. The dearth of buyers opened big gaps and MBS prices fell before rebounding yesterday afternoon to almost unchanged after a day that at one point pushed MBS prices down as much as 35 bps.

The Senate moving closer to passing the $1 trillion infrastructure bill, possibly over the weekend but not likely; next week is more likely. Since negotiators finished the 2,702-page bill last weekend, lawmakers have considered amendments offered by a mix of Republicans and Democrats to fine-tune elements of the bill.

There is nothing left today but to await the July employment report tomorrow morning. The estimates: NFP jobs +900K but traders expecting less after ADP jobs were just half of expectations, private jobs forecasts prior to ADP 735K twice ADP’s 330K.

At 9:30 am the DJIA opened +93, NASDAQ +13, S&P +9. 10 yr. 1.20% +1 bp. FNMA 2.0 30 yr. coupon at 9:30 am -8 bps from yesterday’s close and -23 bp from 9:30 am yesterday.

The US trading in the 10 yr. note now has a double bottom at 1.13%, not definitive though unless the 10 exceeds 1.30%. If that happens the technical estimates would be a move to 1.44%. That said, our very short term models still hold bullish patterns that we are ignoring with the fundamentals presently driving traders’ concerns about tomorrow’s employment data. This morning MBS prices are continuing to work lower.

PRICES @ 10:00 AM ET

10 yr. note: 1.20% +2 bp

5 yr. note: 0.72% +4 bp

2 Yr. note: 0.20% +2 bp

30 yr. bond: 1.86% +2 bp

Libor Rates: 1 mo. 0.089%; 3 mo. 0.121%; 6 mo. 0.155%; 1 yr. 0.229% (8/4/21)

30 yr. FNMA 2.0: @9:30 101.95 -8 bp (-28 bp from 9:30 am ET yesterday)

30 yr. FNMA 2.5: @9:30 104.23 -3 bp (-11 bp from 9:30 am ET yesterday)

30 yr. GNMA 2.5: @9:30 103.61 -3 bp (-8 bp from 9:30 am ET yesterday)

Dollar/Yuan: $6.4612 -$0.0051

Dollar/Yen: 109.73 +0.24 yen

Dollar/Euro: $1.1839 unch

Dollar Index: 92.19 -0.08

Gold: $1811.30 -$3.20

Bitcoin: 37,745 -1,962

Crude Oil: $68.53 +$0.38

DJIA: 34,946 +152

NASDAQ: 14,842 +62

S&P 500: 4419 +16

About Richard Sardella

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.

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 5th, 2021 8:50 AM

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