January 8th, 2021 8:48 AM by Richard Sardella MLO.100007700/NMLS 233568
The Dec employment report this morning reflected what ADP reported on Wednesday, that jobs declined. NFP jobs were expected +50K, but declined 140K, and Nov jobs originally reported at +245K were increased to 336K. Private jobs thought to be +90K declined 95K, like NFP jobs, Nov revised from 344K to 427K. The revisions in Nov were some of the largest revisions we have seen in years. Manufacturing jobs +38K on forecasts of 21K, and Nov revised from 27K to 35K. The unemployment rate at 6.7% was expected at 6.8% and was unchanged from Nov. The bright spot; average hourly earnings were expected to have increased by 0.2%, as reported +0.8% and Yr./yr. +5.1% compared to 4.4% forecasts.
The US and the world are still aghast and unsure what to make of the Wednesday of the Capital building breach; new photos showing a man sitting in Pelosi’s office chair, one shown walking through the rotunda with the Speaker’s lectern. It remains unclear why the police force was not prepared for the protests to escalate.
Talk of impeachment swirling around, or Pence to potentially call the cabinet together to oust Trump under the 25 amendment. Neither will likely occur; 12 days until Biden’s inauguration, not enough time to impeach and not enough votes; Pence isn’t about to act on the 25th amendment. The rate markets are shrugging off that scenario as very unlikely.
At 9:30 am ET, the DJIA opened +91, NASDAQ +86, S&P +17. 10 yr. at 9:30 am 1.10% +2 bps. FNMA 2.0 30 yr. coupon at 9:30 am -14 bps, and -19 bps from 9:30 am yesterday. The 2.5 MBS coupon at 9:30 am unchanged on the day, and -4 bps from 9:30 am yesterday.
At 3:00 pm ET this afternoon, Nov consumer credit, the consensus is credit increased $9.0B.
If you are surprised about the rapid increase in the 10 yr. and MBSs, you missed our forecasts that there would be a rapid move when the 10 yr. beaches 1.0%. After six weeks of flat movement, a strong reaction would ensue once the break occurs. On the other side, had the 10 yr. moved down to 0.90%, the reaction would have been the same, a quick move lower. How much more will the 10 yr. increase? The eventual target is 1.26%, but that isn’t likely soon; technically, now we expect consolidation next week. The 10 yr. is oversold in the near term now. That said, any improvements won’t change the bearish outlook for higher rates ahead.
PRICES @ 10:00 AM ET
10 yr. note: 1.10% +2 bp
5 yr. note: 0.47% +1 bp
2 Yr. note: 0.13% -1 bp
30 yr. bond: 1.86% +1 bp
Libor Rates: 1 mo. 0.132%; 3 mo. 0.224%; 6 mo. 0.251%; 1 yr. 0.329% (1/07/21)
30 yr. FNMA 2.0: @9:30 103.20 -14 bp (-19 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 105.13 unch (-4 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.98 -19 bp (-18 bp from 9:30 yesterday)
Dollar/Yuan: $6.4705 -$0.0077
Dollar/Yen: 103.89 +0.07 yen
Dollar/Euro: $1.2248 -$0.0021
Dollar Index: 89.79 -0.04
Gold: $1866.30 -$47.30
Bitcoin: $41,384 +$1788
Crude Oil: $51.52 +$0.69
DJIA: 31,068 +27
NASDAQ: 13,171 +103
S&P 500: 3820 +16
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.