July 1st, 2021 11:10 AM by Richard Sardella MLO.100007700/NMLS 233568
At 8:30 am ET, weekly jobless claims declined to their lowest since the pandemic; forecasts were for claims at 395K, as reported 364K down 51K from the prior week. The 4 week average at 392.75K, down from 398.75K the prior week. There was not much reaction to it in the interest rate sector, the 10 yr. note at 1.47% unchanged, MBS prices after the report -3 bps from yesterday. US stock indexes also no reaction but +95 on the DJIA. Jobless claims, a proxy for layoffs, are down by more than 40% since the first week of April but remain about double pre-pandemic levels. In early June, the JOLTS job openings from the Labor Dept. showed openings for new jobs totaled just shy of 10 million jobs available. Job postings at food-services businesses were 25% above pre-pandemic levels at the end of May. Postings in hospitality and tourism nearly returned to pre-pandemic levels last month, ending May 3.6% below the February 2020 level; May data, but June data will be better than that when it is released.
We have been watching and concerned about the increasing drought that is growing rapidly in the West. It's increasing, and it is becoming more a national concern (or it will be soon) about the increasing costs of foods that grow in Californian and Washington and irrigation in Arizona. Not much being said about it will change unless massive amounts of rain occur and a heavy snowpack develops this winter. Roughly 9.8% of the US is currently in what climate experts refer to as exceptional drought, the most severe designation characterized by widespread crop and pasture losses and shortages in reservoirs, streams, and wells amounting to water emergencies. About 44% of the nation is experiencing some level of drought, with a further 13% currently affected by drier-than-normal conditions. Just something to be thinking about
The Fed continues to downplay inflation as a long-term concern, repeatedly saying current price increases are transitory (the Fed's preferred term). Increasingly we are reading more and more comments from analysts and some economists worrying that consumers that are worrying about it may become a self-fulling prophesy. If consumers believe inflation will increase and increase current spending, then inflation may become a serious problem for the Fed. Some talk increasing is that the Fed may fall so far behind it that it loses any control, not sure that it is credible, but it keeps inflation on the front pages, even though markets are not currently showing any fear. The Fed's focus has shifted to trying to stop inflation concerns from spiraling after a 3.9% annual surge in prices in May and a jump in consumer expectations to their highest level since 2013 in a monthly New York Fed survey. Reuters reports that the ECB is planning several meetings in the coming weeks to work out differences surrounding its new inflation strategy. The bottom line is that investors and traders are not buying that argument, stocks increasing, and the 10 yr. note rate not increasing.
At 9:30 am ET, the DJIA opened +90, NASDAQ -7, S&P +9. 10 yr. at 9:30 am 1.46% -1 bp. FNMA 2.5 30 yr. coupon -5 bps from yesterday's close and -14 bps from 9:30 am yesterday.
At 9:45 am ET, the June PMI manufacturing index was thought to be at 62.6 from the preliminary 62.1; as released 62.1. June manufacturing PMI data across Europe was solid, highlighted by a record-high reading of 63.4 for the Eurozone. China's Caixin Manufacturing PMI slipped to a three-month low of 51.3 versus 52.0 in May. India saw the first contraction in its manufacturing PMI data in 11 months.
At 10:00 am ET, the June ISM manufacturing index was expected at 61.0, reported at 60.6. Also at 10:00 am, May construction spending, expected +0.4%, as reported -0.3%.
Tomorrow June employment data; the current estimates for NFP jobs +675K compared to 559K in May, private jobs +555K from 492K in May. Unemployment rate 5.7% down from 5.8% in May, average hourly earnings +0.4%, annually +3.1% up from 2.0% in May.
PRICES @ 10:00 AM ET
10 yr. note: 1.46% -1 bp
5 yr. note: 0.88% -1 bp
2 Yr. note: 0.25% unch
30 yr. bond: 2.08% -1 bp
Libor Rates: 1 mo. 0.100%; 3 mo. 0.145%; 6 mo. 0.159%; 1 yr. 0.246% (6/30/21)
30 yr. FNMA 2.0: @9:30 100.97 -2 bp (-12 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 103.36 -5 bp (-14 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 103.09 -6 bp (-10 bp from 9:30 yesterday)
Dollar/Yuan: $6.4647 +$0.0075
Dollar/Yen: 111.47 +0.36 yen
Dollar/Euro: $1.1867 +$0.0010
Dollar Index: 92.35 -0.09
Gold: $1780.00 +$8.40
Bitcoin: 33,616 -1,156
Crude Oil: $75.79 +$2.33 (huge inflation in gasoline prices)
DJIA: 34,580 +78
NASDAQ: 14,502 -2
S&P 500: 4309 +12
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.