January 6th, 2021 9:43 AM by Richard Sardella MLO.100007700/NMLS 233568
At 5:30 am ET this morning, the 10 yr. note increased to 1.03%; it was only a matter of time. As you know, we have held a bearish bias for the last month, although there has been little to no movement. The jump over 1.0% didn't hold, at 8:15 am ET at 0.98% -3 bps from yesterday's close. Why did the 10 yr. increase? It was the announcement by the Associated Press that one Georgia election has been resolved.
At 8:15 am ET, the ADP private jobs report, expected at +130K jobs, fell 123K. The decline added support for the 10 yr. slipping back within its month-long range. The job losses are the first since last April and adds more concern that the virus is causing more economic impact than markets are presently thinking. The data showed that service employment fell 105,000, led by a 58,000 decrease in leisure and hospitality payrolls and a 50,000 drop within trade, transportation, and utilities. Payrolls at goods producers decreased 18,000 as factory jobs declined. On Friday, the BLS Dec data, the estimates before this ADP number was that private jobs increased 50K and NFP jobs +65K; now those estimates in play with some economists already forecasting job losses.
Vote counting in Georgia is going smoother than what was thought. There is a winner between Democrat Raphael Warnock and Republican Senator Kelly Loeffler in one of the runoff races, the Associated Press reported Wednesday. The 10-year yield rose to 1.03% for the first time since March, and S&P 500 futures fell as traders evaluated the implications of a potential Democratic control of the Senate, such as additional fiscal stimulus and tax hikes. Nasdaq 100 futures tumbled, a sign of concern about the possibility of stepped-up antitrust scrutiny of internet giants under a so-called "blue wave." The other race between David Perdue and Democrat Jon Ossoff is still not decided, but Ossoff is said to be leading. "From the numbers we're looking at right now, it doesn't look good for the two incumbent Republican senators," said elections official Gabriel Sterling, a Republican. Loeffler showed no sign of conceding. "There are a lot of votes out there, as y'all know," she told supporters. "And we have a path to victory and we're staying on it." If both Dems win in Georgia, the Senate will be 50/50 with Kamala Harris as a tie-breaker on any tie votes that will ensue when Democrats begin their agenda, and the blame for the outcome will fall on Trump.
Congress will meet in a joint session today to certify the electoral college vote count. Some Republicans and a couple of Dems will object to the count, but it won't change the outcome.
At 9:30 am ET, the DJIA opened -15, NASDAQ -139, S&P -13. 10 yr. note 1.01% +6 bps (high earlier 1.03%). FNMA 2.0 30 yr. coupon at 9:30 am -19 bps from yesterday's close, and -25 bp from 9:30 am yesterday.
At 10:00 am ET, Nov factory orders +1.0% on estimates of +0.6%.
At 2:00 pm ET, we'll get the minutes from the Dec FOMC meeting.
The bond market focusing today on what looks like the Georgia elections will be won by Democrats, which will split the Senate 50/50. The bellwether 10 yr. has been struggling to keep below 1.00% for a month, now over it. Always a technical hurdle ahead in any market, to add more credence to this morning's selling, the 10 yr. has to stay above 1.00%. The move this morning has also pushed the 9-day relative strength index to overbought levels, suggesting the possibility of consolidation with the wider bias bearish.
PRICES @ 10:00 AM ET
10 yr. note: 1.05% +9 bp
5 yr. note: 0.42% +4 bp
2 Yr. note: 0.14% +1 bp
30 yr. bond: 1.84% +14 bp
Libor Rates: 1 mo. 0.130%; 3 mo. 0.236%; 6 mo. 0.253%; 1 yr. 0.329% (1/05/21)
30 yr. FNMA 2.0: @9:30 103.52 -19 bps (-27 bps from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 105.25 -17 bps
30 yr. GNMA 2.5: @9:30 105.30 -22 bps
Dollar/Yuan: $6.4631 +$0.0068
Dollar/Yen: 103.20 +0.48 yen
Dollar/Euro: $1.2309 +$0.0009
Dollar Index: 89.57 +0.13
Gold: $1930.80 -$23.60
Bitcoin: $34,466 +$677
Crude Oil: $50.10 +$0.17
DJIA: 30,648 +257
NASDAQ: 12,732 -86
S&P 500: 3738 +11
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.