December 11th, 2020 9:00 AM by Richard Sardella MLO.100007700/NMLS 233568
There's still no stimulus deal, and the clock is ticking. The current hang-up are the differences between Republicans and Democrats on shielding companies from virus-related lawsuits. Democrats and Republicans have two hurdles neither want to work out; liability protection for businesses as the pandemic grew and funding for states and local governments costs related to the virus. Mitch McConnell wants to move ahead with the stimulus, putting those issues off for another day; Pelosi and other top Democrats who are open to a pause in liability lawsuits in exchange for the $160B in state aid floated by a bipartisan group of negotiators.
At midnight tonight, without a temporary funding bill, the government will shut down. The stimulus bill once was tied to the current funding bill that has to be passed; now, the outlook for a stimulus bill looks bleak. The lawmakers are starting to talk about missing the Dec 18th deadline and negotiating after Christmas. If it drags on until after Christmas, it will very likely drag on until Jan 5th, when the Georgia senate run-off election before anyone is willing to move.
The stock market and interest rate markets focus daily on the lack of progress, although with little major movements on interest rates. This morning the 10 yr. note at 8:30 am ET 0.89% -2 bps, very early MBS prices +5 bps from yesterday.
Deaths mounting, the vaccine(s) are coming. The US Food and Drug Administration said this morning it was working rapidly to issue an emergency use authorization for Pfizer's COVID-19 vaccine, with the first Americans set to be immunized as early as Monday or Tuesday. A mounting US death toll has tempered enthusiasm about the coming COVID-19 vaccine, with 9/11-like fatalities projected every day for the months ahead, even with a rapid rollout of inoculations. The UK has begun, with all eyes and ears now focused on any adverse issues. There are two cases reported of anaphylaxis, an over-reaction of the body's immune system, among thousands of people inoculated since mass-vaccination began on Tuesday.
At 8:30 am ET, Nov PPI; +0.1% as expected, yr./yr. +0.8% on 0.7% estimates. Core PPI +0.1%, the consensus +0.2%; yr./yr. core thought to be +1.3% increased to +1.4%.
At 9:30 am ET, the DJIA opened -95, NASDAQ -77, S&P -18. 10 yr. at 9:30 am 0.89% -2 bps. FNMA 2.0 30 yr. coupon +5 bp from yesterday's close and unchanged from 9:30 am yesterday.
At 10:00 am ET, the mid-month U. of Michigan consumer sentiment index expected at 76.0 from November's 76.9; the index increased to 81.4.
The 10 yr. note at 0.89% is three bps away from the first major technical resistance at 0.86%, the 40-day average that hasn't been penetrated since early August. The 40-day average has been rock solid every time the yield declines. After that, 0.83% is the last resistance that, if it is breached, will end 4 months of bearishness.
PRICES @ 10:00 AM ET
10 yr. note: 0.88% -3 bp
5 yr. note: 0.35% -2 bp
2 Yr. note: 0.12% -1 bp
30 yr. bond: 1.61% -2 bp
Libor Rates: 1 mo. .153%; 3 mo. 0.219%; 6 mo. 0.244%; 1 yr. 0.334% (12/10/20)
30 yr. FNMA 2.0: @9:30 103.59 +5 bp (unch from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.78 +2 bp (-17 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.61 +8 bp (+8 bp from 9:30 yesterday)
Dollar/Yuan: $6.5467 +$0.0012
Dollar/Yen: 104.01 -0.21 yen
Dollar/Euro: $1.2122 -$0.0020
Dollar Index: 91.00 +0.198
Gold: $1840.90 +$3.50
Crude Oil: $46.46 -$0.32
DJIA: 29,961 -38
NASDAQ: 12,360 -46
S&P 500: 3656 -12
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.