December 28th, 2020 9:22 AM by Richard Sardella MLO.100007700/NMLS 233568
Last night the President signed the stimulus and debt ceiling increase bill after he threatened to veto it because he wanted $2,000.00 a month stimulus to those in need and issues with the fluff.
This morning, interest rate markets edged higher, and in futures trading in the stock indexes pointing higher. There are no economic reports today and not much this week. Treasury will auction $176B of notes this week beginning today with 2ry and 5 yr. auctions, and tomorrow $59B of 7s. The 2, 5, and 7 yr. note auction monthly package is 36% higher than one year ago, as debt increases over the virus—Treasury debt now at $27 trillion.
Another short week wrapping up the year, early closes on Thursday in the bond and stock markets.
President Trump signed the $2.3 trillion aid, and the government shut down legislation Sunday evening.
Trump’s delay and threat to veto the bill is adding concern about the runoff senate votes in Georgia, pitting the Republican candidates in a box as the vote on Jan 5th looms. Markets are divided about how it will turn out, but as you know, if Republicans lose the Senate, Democrats will have 2 yrs. of total control of Congress and the White House. The race will be very close, according to analysts tracking the election.
At 9:30 am ET, the DJIA opened +151, NASDAQ +101, S&P +26. 10 yr. at 9:30 am 0.95% +2 bps. FNMA 2.0 30 yr. coupon at 9:30 am -3 bps from last Thursday’s close and +5 bps from 9:30 am Thursday morning.
At 11:30 am ET, $58B 2 yr. note auction.
At 1:00 pm ET, $59B 5 yr. note auction.
The bellwether 10 yr. note increased to 0.96% this morning +0.2% on signing the stimulus and debt ceiling increase. Stock indexes opening better. The 10 yr. is finding support just under the critical psychological 1.00% level. No matter the news so far, the 10 yr. is holding for now and keeping MBS prices trading on strong demand. Our technical outlook remains bearish as it has been since early August. The trading range all through Dec has kept the 10 yr. in a narrow 8 bp range with most trading between 0.90% and 0.94%. Mortgage rates, though, have strong demand from investors outperforming the 10 yr. Low mortgage rates in the face of the increasing potential of increasing rates increases demand as the duration risk lessens.
PRICES @ 10:00 AM ET
10 yr. note: 0.95% +2 bp
5 yr. note: 0.38% +2 bp
2 Yr. note: 0.13% +1 bp
30 yr. bond: 1.71% +4 bp
Libor Rates: 1 mo. 0.145%; 3 mo. 0.240%; 6 mo. 0.266%; 1 yr. 0.340% (12/24/20)
30 yr. FNMA 2.0: @9:30 103.52 -3 bp (+5 bp from 9:30 Thursday)
30 yr. FNMA 2.5: @9:30 105.13 +2 bp (+5 bp from 9:30 Thursday)
30 yr. GNMA 2.5: @9:30 105.08 -12 bp (unch from 9:30 Thursday)
Dollar/Yuan: $6.5354 -$0.0064
Dollar/Yen: 103.65 +0.15 yen
Dollar/Euro: $1.2235 +$0.0059
Dollar Index: 90.11 -0.21
Gold: $1897.50 +$14.10
Crude Oil: $48.04 -$0.19
DJIA: 30,398 +198
NASDAQ: 12,895 +93
S&P 500: 3729 +26
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.