January 26th, 2023 8:58 AM by Richard Sardella MLO.100007700/NMLS 233568
Weekly jobless claims were expected at 202K from 192K the week before, claims dropped to 186K down 6K from the prior week, the 4 week average from 206.75K to 197.50. The Fed wants to see employment slow, and wages stabilize, the claims the last two weeks continue to decline as large tech companies continue to slash jobs. Continuing jobless claims for the week ending January 14 increased by 20,000 to 1.675 million. The low level of initial claims is indicative of a tight labor market, which is something that should keep the Fed concerned about wage pressures remaining persistently high. The total number of continued weeks claimed for benefits in all programs for the week ending January 7 was 1,935,731, an increase of 41,922 from the previous week. In the same week a year ago, there were 2,310,889 weekly claims filed for benefits in all programs.
Dec durable goods orders thought to be +2.8% increased 5.6%; excluding transportation orders -0.1% from +0.2% in Nov. Core capital goods orders -0.2% as expected.
Q4 advance GDP better than forecasts of +2.7% increased 2.9%; personal consumption expenditures expected +2.6% increased 2.1%. Q4 GDP better than thought but lower than 3.2% in Q3. GDP Price Deflator was up 3.5% following a 4.4% increase in the third quarter. The core PCE Price Index increased 3.9% versus 4.7% in the third quarter. Government spending increased 3.7% after increasing 3.7% in the third quarter and added 0.64 percentage points to GDP growth. Real GDP increased 2.1% in 2022 versus 5.9% in 2021. The PCE Price Index increased 6.2% in 2022 while the core PCE Price Index increased 5.0%.
Dec US advance trade deficit was expected -$88.5B, as reported -$90.3B; imports +1.9%, exports -1.6%.
The reaction to the four releases wasn’t much, the 10 yr note yield at 9 am 3.46% +1 bp, MBS prices -6 bps from yesterday. The economy doing a little better in Q4 but don’t see that as a major surprise, 0.2% better than estimates.
At 9:30 am the DJIA opened +102, NASDAQ +152, S&P +30. 10 yr at 9:30 am 3.48% +3 bps. FNMA 5.5 30 yr coupon -14 bps from yesterday and +3 bps from 9:30 am yesterday.
At 10 am Dec new home sales expected at 614K from 640K in November, as reported sales increased 616K, Nov revised from 640K to 602K.
This afternoon Treasury will auction $35B of 7 yr notes concluding this week’s borrowing. The auction will be well bid as recent auctions get increased demand form foreign investors as the dollar continues to weaken.
Tomorrow is the big day with the release of Dec PCE, one of Powell’s favorite inflation readings. A drop below 3.40% sets the outlook for the 10 at 3.30%.
PRICES @ 10:00 AM
10 yr note: 3.48% +3 bp
5 yr note: 3.58% +3 bp
2 Yr note: 4.17% +4 bp
30 yr bond: 3.61% +2 bp
Libor Rates: 1 mo 4.517%; 3 mo 4.814^+%; 6 mo 5.108%; 1 yr 5.339% (1/25/23)
30 yr FNMA 6.0: @9:30 am 102.34 -12 bp (+7 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 101.39 -14 bp (+3 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 101.30 -9 bp (+11 bp from 9:30 am yesterday)
Dollar/Yuan: China closed for year of the Rabbit
Dollar/Yen: 130.24 +0.64 yen
Dollar/Euro: $1.0886 -$0.0028
Dollar Index: 101.88 +0.24
Gold: $1932.40 -$10.20
Bitcoin: 23,031 -545
Crude Oil: $81.34 +$1.19
DJIA: 33,716 -27
NASDAQ: 11,417 +103
S&P 500: 4031 +15
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.