December 31st, 2020 9:27 AM by Richard Sardella MLO.100007700/NMLS 233568
Weekly jobless claims at 8:30 am ET, the only scheduled data today, expected at 830K from 803K the previous week, declined to 787K down 19K. There was no reaction to the data; the holiday counts can be misleading in either direction, especially numbers that are less than forecasts. Without adjustments, claims dropped by 31,736. Illinois, which reported a drop of more than 28,500 applications from the prior week, accounted for the lion's share of the overall decline in unadjusted claims.
There was no reaction to the claims data. Today is a short day, and there's little likelihood that financial markets will change much. There isn't going to be a new stimulus bill increasing monies from $600 to $2,000 today and the prospects for it happening next week look slim with Republicans at odds worrying as they should about the Treasury debt.
The increasing federal debt is increasingly getting more attention. The debt at about $27 trillion and growing by another trillion this fiscal year is so far not showing up in markets, but we can see it in the explosion of Bitcoin and gold. Gold this year set a record in price gains, cyber currencies are gaining momentum as the dollar crumbles. Increasing debt will work against lower interest rates, and it is a global condition with most governments drowning in rising debt. The Georgia senate run-off voting cannot be over-emphasized, a Democrat Senate will be a green light for increased taxes and massive spending, further increasing debt. Although GDP growth is expected to be stronger in 2021, it won't be enough to service the federal debt.
At 9:30 am ET, the DJIA opened -10, NASDAQ +4, S&P unchanged. 10 yr. 0.93% unchanged. FNMA 2.0 30 yr. coupon continues to out-perform the 10 yr. note, at 9:30 am +6 bps from yesterday's close and +11 bps from 9:30 am yesterday.
Earlier this month, the FDA said that vaccinating 20 million Americans by year-end was realistic, depending on the vaccination campaign. It has fallen well short of that goal, public health officials saying that the lack of federal funding for vaccine distribution has prevented them from hiring needed staff. Only about 2.8 million Americans had received a COVID-19 vaccine going into the last day of December. According to data released from the Centers for Disease Control and Prevention, only 170,000 people in long-term care facilities received a shot as of Dec. 30, even though 2.2 million doses were distributed for residents.
Next Tuesday, Georgia will determine what the political climate in 2021 will be like. In the meantime, there isn't anything that will override the importance of the financial markets.
Trade today will be quiet, with little changes in stock indexes and interest rates. MBS prices continue to gain as demand remains strong with rates better and continued belief there won't be a duration issue where rates fall enough to set off another major round of refinancing of mortgages currently on the books.
PRICES @ 10:00 AM ET
10 yr. note: 0.92% -1 bp
5 yr. note: 0.36% -1 bp
2 Yr. note: 0.12% -1 bp
30 yr. bond: 1.66% unch
Libor Rates: 1 mo. 0.144%; 3 mo. 0.237%; 6 mo. 0.259%; 1 yr. 0.342% (12/30/220)
30 yr. FNMA 2.0 : @9:30 10378 +6 bp (+11 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 105.33 +5 bp (+8 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 105.47 -8 bp (+3 bp from 9:03 yesterday)
Dollar/Yuan: $6.5339 +$0.0106
Dollar/Yen: 103.05 -0.15 yen
Dollar/Euro: $1.2271 -$0.0028
Dollar Index: 89.67 -0.01
Gold: $1900.80 +$7.40
Crude Oil: $48.06 -$0.34
DJIA: 30,381 -28
NASDAQ: 12,846 -23
S&P 500: 3732 unch
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.