December 22nd, 2022 9:33 AM by Richard Sardella MLO.100007700/NMLS 233568
Overnight (5 am ET) the 10 yr. dropped to 3.63% -4 bps from yesterday, by 8:30 am back to unchanged. MBS prices began lower, stock indexes also slightly lower.
At 8:30 am weekly jobless claims were thought to be 225K, claims reported at 216K, +2K from the week before. The 4 week average of claims 221.75K from 228K the week before. There was no reaction to the data. Also, at 8:30 am the official Q3 GDP. Somewhat of a surprise, up 3.2% from 2.9% on the preliminary release last month, generally don’t see that kind of revision. Personal expenditures in Q3 were thought to be +1.7% increased 2.3%. While it is old news, Q4 almost over but the stronger Q3 does imply the economy is stronger than the recent data has indicated. The reaction was muted, the 10 yr. note increased 1 bps and MBS prices 5 bps lower than yesterday. The stronger Q3 GDP adds more concern that the Fed will keep it up.
The market still doesn’t believe the Fed and its path to higher rates next year. No matter how definitive Powell has been at the end of the day many investors hang on the Fed backing off. Beside PCE tomorrow, Nov durable goods orders and Nov new home sales. PCE is attached to Nov personal income and spending, (personal income expected +0.3% after increasing 0.7% in October, spending +0.2% after increasing 0.8% in October). Nov PCE m/m estimates at +0.2%, yr./yr. +5.55 from 6.0%; core PCE m/m +0.2%, yr./yr. +4.6% from 5.0% in October. Nov durable goods orders expected -0.7% from +1.1% in October, excluding transportation orders 0.0% from 0.5%. Nov new home sales expected at 600K down from 632K. Finally, tomorrow the final U. of Michigan consumer sentiment index is thought to be the same as two weeks ago at 59.1; yesterday the Dec consumer confidence index expected at 101.0 increased to 108.3, a big miss for that report.
At 9:30 am the DJIA opened -180, NASDAQ -124 S&P -30. 10 yr. at 9:30 am 3.68% unchanged. FNMA 5.5 30 yr. coupon at 9:30 am -11 bps and -28 bps from 9:30 am yesterday.
PRICES @ 10:00 AM
10 yr note: 3.67% unch
5 yr note: 3.78% unch
2 Yr note: 4.24% -3 bp
30 yr bond: 3.73% -1 bp
Libor Rates: 1 mo 4.386%; 3 mo 4.729%; 6 mo 5.161%; 1 yr 5.431% (12/21/22)
30 yr FNMA 6.0: @9:30 am 101.88 -12 bp (-26 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 100.94 -11 bp (-28 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 100.84 -11 bp (-50 bp from 9:30 am yesterday)
Dollar/Yuan: $6.9845 +$0.0025
Dollar/Yen: 132.37 -0.09 yen
Dollar/Euro: $1.0598 -$0.0008
Dollar Index: 104.48 +0.32
Gold: $1809.20 -$16.50
Bitcoin: 16,683 -106
Crude Oil: $78.68 +$0.39
DJIA: 33,056 -318
NASDAQ: 10,521 -188
S&P 500: 3830 -48
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 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.