July 19th, 2022 11:47 AM by Richard Sardella MLO.100007700/NMLS 233568
Yesterday the stock indexes started strong but gave it up in the afternoon, from +600 on the DJIA to close -216. The 10 increased 6 bps but down from +8 bps in the morning, MBS prices ended lower (-10 bp) but were down 22 bps when prices were set in the morning.
This morning stock indexes in the futures markets at 8:30 am ET the DJIA +200, the 10 yr. at 8:30 am +1 bp at 3.00%. MBS prices at 8:30 am -5 bps.
At 8:30 am June housing starts and permits; starts at 1.559 mil with estimates at 1.588 mil and down from 1.591 mil in May. Permits 1.685 mil against estimates of 1.666 mil, May permits 1.695 mil. Starts the lowest since September after plunging the prior month, driven by a slide in single-family homebuilding that underscores waning demand. Residential starts declined 2%. Permits also the lowest since last Sept, a two-year low. Yesterday the July NAHB hosing market index dropped to 55 from 67 in June with forecasts at 66, the seventh straight month to 55, the lowest level since May 2020.
On Thursday the ECB meeting, like the FOMC debates within the ECB are considering a 50 bp increase in rates, until the last couple of days the bank was thinking 25 bps. A 50 bp increase from the ECB would be a huge deal since it has been dragging its feet for months in efforts to quell inflation. Money markets see an almost 50% probability of a half-point hike this week compared with 20% odds on Monday. Inflation in Europe 8.6%, US 9.1%.
At 9:30 am the DJIA opened +231, NASDAQ +155, S&P +40. 10 yr. at 9:30 am 2.99% unchanged. FNMA 4.5 30 yr. coupon 100.13 +2 bp and +13 bps from 9:30 am yesterday.
The dollar rampage has eased the last two days, technically very overbought. Commodity prices wavering as the dollar had driven prices higher, most commodities are priced in dollars. That means a rallying dollar makes them more expensive for buyers around the world and drags on demand. If the dollar begins protracted decline those prices will increase. On one hand the strong dollar has worked against inflation, if the dollar were to decline the result would be an increase in inflation outlooks. Not likely that will occur in this current climate though, the world will still want dollars compared to other key currencies.
PRICES @ 10:00 AM
10 yr note: 2.98% -1 bp
5 yr note: 3.10% -1 bp
2 Yr note: 3.18% +1 bp
30 yr bond: 3.14% -1 bp
Libor Rates: 1 mo 2.126%; 3 mo 2.710%; 3.267%; 1 yr 3.863% (7/18/22)
30 yr FNMA 5.0: @9:30 am 101.44 -5 bp (+5 bp from 9:30 am yesterday)
30 yr FNMA 4.5: @9:30 am 100.13 +2 bp (+13 bp from 9:30 am yesterday)
30 yr GNMA 4.0: @9:30 am 99.69 unch (+8 bp from 9:30 am yesterday)
Dollar/Yuan: $6.744 +$0.0012
Dollar/Yen: 137.54 -0.60 yen
Dollar/Euro: $1.0248 +$0.0103
Dollar Index: 106.50 -0.87
Gold: $1711.10 +$0.90
Bitcoin: 22,067 +553
Crude Oil: $101.71 -$0.89
DJIA: 31,410 +337
NASDAQ: 11,501 +141
S&P 500: 3879 -48
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.