December 5th, 2022 9:10 AM by Richard Sardella MLO.100007700/NMLS 233568
Last Friday the bellwether 10 yr. note yield declined 2 bps, this morning in early trading +3 bps. This morning at 8:30 am ET in futures trading the stock indexes traded lower.
Last Friday’s Nov employment data surprised with higher wages reported; the initial reactions sent the 10 up 11 bps and stock indexes down 300 points. It didn’t last, by 12 pm the 10, Mortgages and stock indexes rallied back to end of Friday with MBS prices +8 bp, the 10 3.49% -2 bps and stock indexes generally unchanged.
Over the weekend Chinese authorities eased Covid testing requirements across major cities after unrest spread when authorities locked down entire cities in an attempt to stamp out COVID that set off protests that were compared to the riots of Tiananmen Square years ago.
The key US data this week comes on Friday with Nov producer price index, the estimates so far expect prices to have declined from October adding to the present view inflation is slowing. After the strong increase in wages and jobs reported last Friday markets have to contend with jobs and wage gains as much as inflation data based on prices of goods and services.
No scheduled Fed officials on the calendar this week, the FOMC meeting on Dec 13th, we are in the quiet mode now. This week there are a number of global considerations. The ECB President Christine Lagarde scheduled to speak today. Eurozone GDP on Wednesday. Friday China’s PPI along with US PPI and U. of Michigan consumer sentiment index.
At 9:30 am the DJJIA opened -219, NASDAQ -71, S&P -28. 10 yr. 3.55% +6 bps. FNMA 5.5 30 yr. coupon at 9:30 am -28 bps but +35 bps from 9:30 am Friday.
At 9:45 am Nov PMI services index at 46.2 against estimates of 46.3.
At 10 am Nov ISM services index, expected 53.5, as reported the index increased to 56.5.
Also at 10 am October factory orders expected +0.7%, as reported +1.0%. Durables +1.0%.
The 10 yr. note is overbought near term, expect the yield to increase some or at best trade sideways until the technical overbought condition is discounted. By 10 am MBS prices fell 55 bps from -28 bps at 9:30 am.
PRICES @ 10:00 AM
10 yr note: 3.56% +7 bp
5 yr note: 3.72% +7 bp
2 Yr note: 4.35% +10 bp
30 yr bond: 3.60% +7 bp
Libor Rates: 1 mo 4.185%; 3 mo 4.733%; 6 mo 5.149%; 1 yr 5.429% (12/2/22)
30 yr FNMA 6.0: @9:30 am 102.50 -22 bp (+37 bp from 9:30 am Friday)
30 yr FNMA 5.5: @9:30 am 101.41 -28 bp (+35 bp from 9:30 am Friday)
30 yr GNMA 5.5: @9:30 am 101.28 -28 bp (+30 bp from 9:30 am Friday)
Dollar/Yuan: $7.9491 -$0.0755
Dollar/Yen: 135.73 +1.42 yen
Dollar/Euro: $1.0566 +$0.0023
Dollar Index: 104.53 -0.01
Gold: $1803.50 -$6.10
Bitcoin: 17,214 +101
Crude Oil: $82.42 +$2.38
DJIA: 34,106 -324
NASDAQ: 11,339 -123
S&P 500: 4029 -43
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.