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Daily Market Analysis December 30, 2021

December 30th, 2021 3:09 PM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

The day began with interest rates unchanged from yesterday; MBS prices also little changed. Stock indexes in futures trading were slightly better.

At 8:30 am est weekly jobless claims were thought to be 205K, claims dropped to 198K -8K from the previous week. Applications for unemployment benefits, a proxy for layoffs, have trended near five-decade lows in recent weeks. The 4 week average at 199.25K which smooths out volatility, fell to the lowest level since October 1969. Jobless claims, which can be volatile around holiday periods, will be closely watched in the coming weeks for any signs that the omicron variant is causing employers to lay off workers.

The omicron variant is continuing to grow; as of Tuesday, the number of cases set a record of 265,427 cases a day on average, according to a Wall Street Journal analysis of Johns Hopkins University data. The average for Tuesday was about 13,400 greater than the previous high set on Jan. 11, 2021, although there was less testing during the earlier stages of the pandemic. Covid-19 cases in the U.S. increased roughly 60% this week, largely because of the Omicron variant, Centers for Disease Control and Prevention Director Rochelle Walensky said yesterday at a White House Covid-19 briefing. The seven-day average of hospitalizations, though increasing, is below both the pandemic peak of 137,510 on Jan. 10, 2021, and the smaller peak of 102,967 on Sept. 4, 2021, during the Delta surge.

Yesterday interest rates spiked to the highest level since the end of November and pushed MBS prices down 36 bps. Even with a few of the big Wall Street houses warning of weak Q1 economic outlook, inflation concerns and a generally better economic outlook than some firms are now touting overrode those outlooks. Markets, even with the increasing cases of the virus, appear less cautious, at least for the moment. The strong selling yesterday was on very low volume and likely to be somewhat excessive. This morning some rebound but so far not much. Inflation concerns taking a back seat to omicron infections these days. The Fed primed to increase rates by this spring, presently all focus on the virus; there is little evidence that inflation will lessen.

At 9:30 am the DJIA opened +76, NASDAQ -6, S&P +6 (S&P has made 70 new highs this year). The 10 at 9:30 am 1.53% -2 bp. FNMA 2.5 20 yr coupon at 9:30 am +5 bps but down 24 bps from 9:30 am yesterday.

At 9:45 am Dec Chicago purchasing mgrs. index, the last data this year, expected at 62.0 from 61.8 in November increased to 63.1.

Nothing on the schedule the remainder of the session; trading floors emptying ahead of an early close tomorrow (2:00 pm for the bond market). The stock market trades all day tomorrow.

PRICES @ 10:00 AM

10 yr note: 1.54% -1 bp

5 yr note: 1.29% -1 bp

2 Yr note: 0.75% unch

30 yr bond: 1.95% -1 bp

Libor Rates: 1 mo o.104%; 3 mo 0.233%; 6 mo 0.354%; 1

yr 0.586% (12/28/21)

30 yr FNMA 3.0: @9:30 103.45 +6 bp (-11 bp from 9:30 yesterday)

30 yr FNMA 2.5: @9:30 101.84 +5 bp (-24 bp from 9:30 yesterday) …..by 10:00 am unch and -29 bps from 9:30 am yesterday

30 yr GNMA 2.5: @9:30 102.27 +6 bp (-23 bp from 9:30 yesterday)

Dollar/Yuan: $6.3729 +0.0046

Dollar/Yen: 115.12 +0.15 yen

Dollar/Euro: $1.1332 -$0.0019

Dollar Index: 96.03 +0.10

Gold: $1807.50 +$1.70

Bitcoin: 47,312 -153

Crude Oil: $76.95 +$0.39

DJIA: 36,579 +90

NASDAQ: 15,803 +36

S&P 500: 4800 +7

About Richard Sardella

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.

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 30th, 2021 3:09 PM

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