July 16th, 2021 8:53 AM by Richard Sardella MLO.100007700/NMLS 233568
Yesterday, the interest rates declined on more positive news from Jerome Powell when he testified at the House. This morning, he will be at the Senate beginning at 9:30 am ET.
Weekly jobless claims at 8:30 am ET, down 26K to 360K, a new pandemic low. Initial claims remain above pre-pandemic levels, and employers continue to point out trouble with finding qualified workers. Government checks continue to flow, keeping many from going back to work; the extended payments end in Sept. Meantime, increasing numbers of state governors are ending the checks. States including Minnesota, Mississippi, and Wyoming -- which have ended Pandemic Unemployment Assistance for self-employed workers -- saw no initial claims in that program last week.
Also at 8:30 am ET, June import and export prices; imports +1.0%, yr./yr. +11.2%; export prices +1.2%, yr./yr. +16.8%. Both were in line with estimates.
July Philadelphia Fed business index was expected at 28.5 from 30.7 in June, as released 21.9.
Yesterday, Democrats got an agreement on the spending bill, a two-pronged approach to enacting Biden's agenda. A $3.5T tax and social spending plan, backed only by Democrats, and a $579 billion bipartisan infrastructure bill. Party leaders still need to make trade-offs to get all 50 members of their Senate caucus on board and keep their fractious House contingent united. The budget plan would provide a wish list of new social benefits, including universal pre-kindergarten, two free years of community college, Medicare coverage of dental, vision and hearing care, and extended child tax credits. It would impose new energy standards on utilities, legalize some undocumented immigrants, and grant unions new rights, all paid for by the largest corporate and individual tax increases in decades, a carbon tariff, and cuts to the prices Medicare pays for drugs. Republicans are pointing to the accompanying surge in inflation to hammer the president's party over higher prices for used cars, apparel, and more. Treasury Secretary Janet Yellen told a House committee: "I came of age and studied economics in the 1970s, and I remember what that terrible period was like and no one wants to see that happen again."
Jamie Dimon, JP Morgan/Chase commenting earlier this week; "You may have growth in the second half this year that's stronger than it's ever been in the United States of America." The yield on 10-year Treasury notes, at around 1.35% versus 1.75% in March, could climb to 3%, Dimon added.
At 9:15 am ET, June industrial production was thought to be +0.7%, increased just 0.4%, manufacturing output expected at +0.3% declined 0.1%. Factory use was thought to be 75.6%, reported at 75.4%.
At 9:30 am ET, the DJIA opened -132, NASDAQ -8, S&P -9. 10 yr. at 9:30 am 1.32% -3 bps. FNMA 2.5 30 yr. coupon at 9:30 am +6 bps from yesterday's close and +19 bps from 9:30 yesterday.
The 10 yr. note is slipping back toward 1.30%, which is a technical resistance level. If the note closes below 1.30% and holds it, the next resistance is 1.20%. We'll always go with the technicals but against the strong fundamentals getting long treasuries isn't a comfortable feeling. The Fed, for all of its talk that the economic outlook isn't yet a full speed and won't increase rates or begin to unwind its $120B a month purchases of treasuries and MBSs, is increasingly bucking higher headwinds.
PRICES @ 10:00 AM ET
10 yr. note: 1.32% -3 bp
5 yr. note: 0.78% -2 bp
2 Yr. note: 0.23% unch
30 yr. bond: 1.94% -3 bp
Libor Rates: 1 mo. 0.091%; 3 mo. 0.126%; 6 mo. 0.150%; 1 yr. 0.243% (7/14/21)
30 yr. FNMA 2.0: @9:30 101.44 +8 bp (+24 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 103.66 +6 bp (+19 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 103.42 +6 bp (+16 bp from 9:30 yesterday)
Dollar/Yuan: $6.4614 -$0.0078
Dollar/Yen: 109.89 -0.08 yen
Dollar/Euro: $1.1816 -$0.0022
Dollar Index: 92.51 +0.10
Gold: $1825.40 +$0.40
Bitcoin: 31,827 -915
Crude Oil: $72.20 -$0.93
DJIA: 34,829 -103
NASDAQ: 14,645 +0.71
S&P 500: 4366 -8
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.