January 24th, 2023 9:10 AM by Richard Sardella MLO.100007700/NMLS 233568
Yesterday the 10 ended at 3.51% +2 bp, MBS prices got a slight boost after 4 pm ET yesterday ending -13 bps generally unchanged from 9:30 am yesterday. This morning the 10 started -1 bp and MBSs opened 7 bps lower. Stock indexes in futures trade began lower after the DJIA gained 254 and NASDAQ 224.
Companies are cutting jobs at a rapid rate, according to an article in the WSJ this morning; in the last five months of 2022, employers cut 110,800 temp workers, including 35,000 in December, the largest monthly drop since early 2021. Many economists view the sector as an early indicator of future labor-market shifts. Temps are easy to hire, or fire compared to full timers. Cutting temps, an indication companies are reducing overhead of what many see as a weakening economic outlook, the cuts are mostly from large corps, small businesses still adding jobs. The labor market is historically strong but slowing. Employers added 223,000 jobs in December, the smallest gain in two years. Economists surveyed by The Wall Street Journal expect higher interest rates to trigger job losses and a recession this year as the Federal Reserve’s interest-rate increases filter through the economy.
At 9:30 am the DJIA opened -160, NASDAQ -58, S&P -20. 10 yr. 3.52% unchanged. MBS prices down 12 bps after the late afternoon bump up at 5 pm, from 9:30 am yesterday the 5.5 30 yr. coupon -3 bps.
At 9:45 am Jan FLASH PMI, the composite 46.6 from 44.7; manufacturing expected at 46.5 increased to 56.8 while services were thought to be 45.5 increased to 46.6. Better but the indexes still under 50 implying contraction. Japan's Manufacturing PMI remained in contraction for the third consecutive month in the flash reading for January, reaching its lowest level since late 2020. Elsewhere, flash Manufacturing and Services PMI readings for the Eurozone improved from their December levels, but Manufacturing PMI remained below 50.0, indicating continued contraction in the sector.
This afternoon Treasury will begin this week’s auctions with $42B of 2 yr. notes, tomorrow $43B of 5s and Thursday $35B of 7 yr. notes.
Thursday’s calendar has a number of key releases; weekly claims, new home sales, durable goods orders and the first look at Q1 GDP. Friday the last look at inflation prior to the FOMC next week with Dec PCE, Powell’s continuing favorite read. The estimates are encouraging; m/m PCE 0.0% from +0.1% in Nov, yr./yr. +5.0% from 5.5%, the core m/m +0.3% from +0.2% but yr./yr. +4.4% down from 4.7%. Also, on Friday Dec pending home sales and the U. of Michigan consumer sentiment index.
All key markets are beginning the day unchanged, from crude, gold, and currencies; we don’t look for any changes through the session.
PRICES @ 10:00 AM
10 yr note: 3.54% +2 bp
5 yr note: 3.65% +3 bp
2 Yr note: 4.26% +3 bp
30 yr bond: 3.69% +1 bp
Libor Rates: 1 mo 4.506%; 3 mo 4.818%; 6 mo 5.098%; 1 yr 5.342% (1/23/23)
30 yr FNMA 6.0: @9:30 am 102.13 -6 bp (+6 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 101.19 -5 bp (-3 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 100.95 -6 bp (-10 bp from 9:30 am yesterday)
Dollar/Yuan: China closed for Lunar new year, the year of the rabbit.
Dollar/Yen: 130.69 +0.04 yen
Dollar/Euro: $1.0861 -$0.0012
Dollar Index: 102.15 +0.01
Gold: $1931.00 +$2.40
Bitcoin: 22,869 -120
Crude Oil: $81.59 -$0.03
DJIA: 33,477 -152
NASDAQ: 11,311 -54
S&P 500: 3998 -21
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.