December 22nd, 2020 9:38 AM by Richard Sardella MLO.100007700/NMLS 233568
The stimulus bill, after six months of political wrangling, is finally a done deal. The government won’t close (as if anyone believed it would), and the stimulus s already panned as not enough. Pelosi and other Democrats are saying wait until Biden is sworn in and money will flow. That is entirely dependent on Georgia; money won’t flow if Republicans remain in control of the Senate.
The new COVID variant that has surfaced in the UK set off another wide closure of EU countries and travel bans between many countries, including the US. Not much about it from the scientists other than they don’t believe the new strain will be immune to the vaccines being released.
Q3 final GDP released this morning was a little better than expected, at 33.4% growth on forecasts of 33.1%. Personal consumption spending at +41.0% yr./yr.
At 9:30 am ET, the DJIA opened -46, NASDAQ +33, S&P -3. 10 yr. 0.93% -1 bp. FNMA 2.0 30 yr. coupon at 9:30 am +8 bps from yesterday’s close, and -4 bps from 9:30 am yesterday. Investors continue to have a strong appetite for MBSs; the low rates and duration are not an issue. No worries that MBSs will suffer from shortened duration driven by substantially lower rates that would set off another strong round of refinances.
At 10:00 am ET, Nov existing home sales, expected at 6.72 mil from 6.85 mil in October, sales reported at 6.69 mil -2.5% and the first two-month decline in the last five months. Dec Conference Board’s consumer confidence index was thought to be at 97.0 from 92.9 in November Revised lower from 96.1; it declined to the lowest level going back to August at 88.6. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased sharply from 105.9 to 90.3. However, the Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – increased from 84.3 in November to 87.5 this month.
There is little likelihood that financial markets will change much now until next year. Nothing from Congress as members are now on their way home until after the end of the year, and we can’t overstate the obvious significance of the Georgia elections on the 5th of January. The wild card, if any, would be any significant change in the vaccine rollout and closures of states and global economies that are not presently expected.
The two 10:00 am ET data releases, both weaker than forecasts and didn’t impact the interest rate markets from the levels at 9:30 am ET. Reprising; all of our technical analysis remains bearish for the 10 yr. note, although it hasn’t moved; MBSs see buying with better interest rates and no worries about duration.
PRICES @ 10:10 AM ET
10 yr. note: 0.93% -1 bp
5 yr. note: 0.37% -1 bp
2 Yr. note: 0.13% unch
30 yr. bond: 1.67% -1 bp
Libor Rates: 1 mo. 0.145%; 3 mo. 0.244%; 6 mo. 0.260%; 1 yr. 0.332% (12/21/20)
30 yr. FNMA 2.0: @9:30 103.52 +8 bp (-4 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 105.14 +2 bp (-2 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 105.03 -6 bp (-2 bp from 9:30 yesterday)
Dollar/Yuan: $6.5433 -$0.0064
Dollar/Yen: 103.58 +0.28 yen
Dollar/Euro: $1.2212 -$0.0031
Dollar Index: 90.39 +0.35
Gold: $1878.90 -$3.90
Crude Oil: $47.06 -$0.91
DJIA: 30,073 -143
NASDAQ: 12,811 +69
S&P 500: 3688 -6
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 for 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.