January 20th, 2022 9:50 AM by Richard Sardella MLO.100007700/NMLS 233568
Last night in Asian market trading the US 10 yr note yield hit 1.87% after closing in the US at 1.84%. This morning prior to 8:30 am ET data the 10 traded at 1.83% -1 bp from yesterday’s 5:00 pm close.
At 8:30 am weekly jobless claims were expected at 207K, as reported claims increased to 286K +55K from the week before; the 4 week average at 231K +20K from the prior week. Also, at 8:30 am the January Philadelphia Fed business index, expected at 18.5 was better at 23.2.
There was no immediate reaction to the 8:30 am reports, the 10 yr at 1.83% down 1 bp from the US close yesterday but down 4 bps from its high last night in Asian markets. MB prices continued to improve in early trade, +19 bps from yesterday, and yesterday +24 bps when the 10 fell 4 bps.
US stock indexes in pre-opening trade were better after yesterday’s decline. Yesterday on the 9:30 open the indexes opened a little better but by the afternoon rolled over to drop the DJIA 340, NASDAQ -167, and the S&P -44.
At 9:30 am the DJIA opened +147, NASDAQ +140, S&P +21. 10 yr 1.83% -1 bp from US trading yesterday but down 4 bps from the overnight high. FNMA 3.0 30 yr coupon at 9:30 am +27 bps from yesterday’s close and +22 bps from 9:30 yesterday.
At 10:00 am Dec existing home sales, expected at 6.40 mil, as reported 6.10 mil ; sales down 4.6% and yr/yr -7.1%.
Janet Yellen yesterday at the US Conference of Mayors: “Yes, omicron has presented a challenge and will likely impact some of the data in the coming months, But I am confident it will not derail what has been one of the strongest periods of economic growth in a century.” She credited high vaccination rates in the U.S. and emergency spending by cities and states made possible by the Biden administration’s American Rescue Plan for preventing a more serious impact from the variant. A $1.9 trillion bill enacted in March that helped combat the virus and sustain households and businesses through the downturn it caused. But it’s also been blamed for helping to push inflation to its highest level in 40 years. Yellen also said “Congressional negotiations are ongoing regarding the Build Back Better legislation. While we don’t know the final form this will take, it will revolutionize how we care for children in this country, invest in climate change and overhaul the international tax system to ensure corporations pay their fair share.” Nevertheless, Q1 GDP has been ratcheted lower from 3.9% to 3.0% by most economists.
Interest rate markets continue to digest the recent increases. We don’t expect much in the way of improvement and certainly no change in the bearish sentiment. Next Tuesday and Wednesday the FOMC meeting, while focus has been on the March meeting where the expected rate increases will occur, the meeting next week could add or subtract additional views. Highly unlikely until then that there will be any major changes in the present outlook.
PRICES @ 10:00 AM
10 yr note: 1.83% -4 bps (-7 bp from last night in Asia)
5 yr note: 1.62% -3 bp
2 Yr note: 1.04% -1 bp
30 yr bond: 2.15% -3 bp
Libor Rates: 1 mo 0.109%; 3 mo 0.255%; 6 mo 0.447%; 1 yr 0.803% (1/19/22)
30 yr FNMA 3.0: @9:30 102.08 +27 bp (+ 22 bp from 9:30 yesterday)
30 yr FNMA 3.5: @9:30 104.20 unch (-5 bp from 9:30 yesterday)
30 yr GNMA 3.0: @9:30 102.09 +23 bp (+20 bp from 9:30 yesterday)
Dollar/Yuan: $6.3420 -$0.0030
Dollar/Yen: 114.12 -0.21 yen
Dollar/Euro: $1.1346 +$0.0003
Dollar Index: 95.52 +0.01
Gold: $1845.30 +$2.10
Bitcoin: 42.790 +1.095
Crude Oil: $86.94 -$0.04
DJIA: 35,349 +320
NASDAQ: 14,576 +236
S&P 500: 4583 +50
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.