CHM Blog

Daily Market Analysis December 18, 2020

December 18th, 2020 9:28 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

How long has Congress been closing in on stimulus legislation?  The daily headlines usually start with Congress closing in, yet it has been weeks and months that regardless of the daily stated progress, the end is still uncertain. The recent talk is that there won't be a deal today, and Congress will work through the weekend. It is still early in the day, but all the daily optimism has not led to what is needed. The government is set to close down at 12:01 am ET tomorrow morning; the stimulus bill will be attached to Congress increasing the debt ceiling. 

Top Republicans and Democrats are closing in on a coronavirus relief package that would send direct payments to many Americans, enhance unemployment benefits, provide aid to small businesses, and fund distribution of the Covid-19 vaccine, among other measures. Investors have cheered the prospects of additional fiscal stimulus in recent days as high Covid-19 infections and measures to contain its spread have weighed on the economy. Data released yesterday showed that the number of workers seeking unemployment benefits had reached a three-month high. 

At 9:30 am ET, the DJIA opened +15, NASDAQ +22, S&P unchanged. The 10  yr. 0.93% -1 bp. FNMA 2.0 30 yr. coupon at 9:30 am +5 bps from yesterday's close and +1 bp from 9:30 yesterday. 

At 10:00  am ET, Nov leading economic indicators were expected +0.5%, as reported +0.6%.  

We continue to hold a bearish outlook for long-dated interest rates; we are also uncertain from a fundamental perspective. The Fed promises any help that is necessary, no inflation on the horizon for at least two years, according to the Fed's quarterly forecasts released on Wednesday. These issues would lean toward lower interest rates. Mortgage markets have held well and even have more demand than treasuries recently. So why are we continuing our negative outlook? It isn't based on the present fundamentals but on what the market is actually doing rather than what is being said. Our focus is based on short-term conditions that normally precede developing trends. The 10  yr. note has not closed below its 40-day moving average since early August.  Each time the yield slips lower, it's stopped at the 40 day.  This has happened seven times since early August; there is an extremely valid increasing trend line that has not penetrated on rallies going back to August. The reiterated point here is what markets are doing rather than what pundits and economists may say. 

PRICES @ 10:00 AM ET

10 yr. note:               0.92% -2 bp

5 yr. note:                 0.36% -2 bp

2 Yr. note:                 0.11% -2 bp

30 yr. bond:              1.66% -2 bp

Libor Rates:             1 mo. 0.151%;3 mo. 0.238%; 6 mo. 0.260%; 1  yr. 0.333% (12/17/20)

30 yr. FNMA 2.0:    @9:30 103.66 +5 bp (+1 bp from 9:30 yesterday)

30 yr. FNMA 2.5:    @9:30 105.17 +8 bp (+14 bp from 9:30 yesterday)  

30 yr. GNMA 2.5:   @9:30 105.08 +20 bp (+20 bp from 9:30 yesterday)

Dollar/Yuan:           $6.5398 +$0.0066

Dollar/Yen:             103.31 +0.21 yen

Dollar/Euro:           $1.2246 -$0.0024

Dollar Index:         89.96 +0.14

Gold:                      $1888.50 -$1.90

Crude Oil:              $48.83 +$0.47

DJIA:                      30,224 -79

NASDAQ:              12,753 -12

S&P 500:              3711 -11  

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 December 18th, 2020 9:28 AM



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