December 2nd, 2021 9:17 AM by Richard Sardella MLO.100007700/NMLS 233568
Equity markets took another strong hit yesterday pushing more buying of treasuries, the DJIA -462 traded in a 700 point range yesterday, opening stronger then rolling over through the afternoon. The 10 yr. ended down 4 bps at 1.41% and MBS prices increased 25 bps with a lot of lenders repricing in the afternoon after the stock indexes came under pressure. This morning the indexes traded better in the futures markets prior to the 9:30 am ET open, the 10 at 9 am 1.42% +1 bp, MBSs -17 bps.
The only scheduled economic report today, weekly jobless claims at 8:30 am; claims expected at 245K, as reported +222k, up 28K from the week before. No reaction to the slight increase. The smaller-than-expected rise in claims suggests additional progress in the job market. At the same time, seasonal adjustment difficulties are likely to persist into the new year, making the figures tricky to interpret.
A few weeks back it was the delta variant that shook markets, that kind of ebbed as the severity wasn’t as bad as nervous markets were expecting. Now its omicron and once again the worry has driven stocks to near panic. The major contributor to the recent market volatility is that overall the equity markets had become severely over-valued with outlooks so pristine that anything that potentially interfere with the bullish view creates a revolving reaction. The signs were there that greed had exceeded reality. Take a few weeks ago; a new electric truck company, Rivian, went public at an IPO valuation of $120B, more than the total valuation of Ford and GM combined, so far the company hasn’t rolled off any trucks, that is extreme optimism that defines the present condition of the markets.
At 9:30 am the DJIA opened +204, NASDAQ -37, S&P +7. 10 yr. note 1.42% +1 bp. FNMA 2.5 30 yr. coupon at 9:30 am -14 bps, from 9:30 am yesterday +17 bps.
There are no more data points today, no key political remarks or Fed comments that will have direct influence on trading today. Tomorrow the employment data for November. Possibly more news about omicron.
Daily market volatility continues, a 700 point range in the DJIA yesterday flipping from a 300 point gain in the morning to -462. Mortgage markets improved as stocks crumbled from -6 bp at 9:30 am to end the day +25. The 10 yr. note yield is going to head higher once equity markets calm down. So far this morning the 10 yr. at 1.46% last night dropped to 1.41%, as we hit the send tab the 10 climbing back to 1.44% and MBS prices -20 bps at 10 am, 6 lower than 9:30 am.
PRICES @ 10:00 AM
10 yr. note: 1.44% +3 bp
5 yr. note: 1.20% +6 bp
2 Yr. note: 0.62% +6 bp
30 yr. bond: 1.76% +2 bp
Libor Rates: 1 mo. 0.102%; 3 mo. 0.174%; 6 mo. 0.269%; 1 yr. 0.458% (12/1/21)
30 yr. FNMA 3.0: @9:30 am 103.80 -5 bp (+16 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 102.44 -14 bp (+17 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 102.19 -45 bp (+16 bp from 9:30 am yesterday)
Dollar/Yuan: $6.3763 +$0.0082
Dollar/Yen: 112.95 +0.17 yen
Dollar/Euro: $1.1341 +$0.0020
Dollar Index: 95.85 -0.18
Gold: $1769.80 -$15.50
Bitcoin: 57,338 +352
Crude Oil: $64.68 -$0.89
DJIA: 34,490 +458
NASDAQ: 15,392 +138
S&P 500: 4566 +53
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.