July 20th, 2021 9:08 AM by Richard Sardella MLO.100007700/NMLS 233568
The start of the day had stock indexes a little better from yesterday, the 10 yr. note yield choppy (1.22% high, 1.16% low at 8:30 am ET). MBS prices at 8:30 am ET +9 bps from yesterday’s close.
At 8:30 am ET June housing starts and permits; starts were expected at 1.590 mil, they were better at 1.643 mil. Permits a little softer at 1.598 mil on forecasts of 1.00 mil. Starts +6.3%, permits -5.1%. The National Association of Home Builders yesterday showed confidence among single-family homebuilders fell to an 11 month low in July. The NAHB noted that "builders continue to grapple with elevated building material prices and supply shortages which has skyrocketed more than 500 percent above its January 2020 level." Surging home prices and limited supply has put a lid on home sales recently, and fewer U.S. consumers believe that now is a good time to buy a home. Single-family home sales expectations in the next six months rose two points to a reading of 81 in July, while a gauge of current sales conditions decreased one point to 86. The prospective buyers index fell six points to 65.
Yesterday the rate markets and the equity markets convulsed in huge moves; the 10 down to 1.18% -11 bps while the stock indexes dropped 2.0+%. On one hand the delta variant, on the other debate is still there about where inflation may be headed. Presently inflation concerns have given way to concerns the US and global economies may slow and future growth won’t meet the previous forecasts. Investors rushing to safety in treasuries and into MBSs.
European government bond yields edged down to multi-month lows. The 10-year German bund yield was at minus 0.423%, the lowest since February. US stocks lost 1.6% of their value, commodities went into a downturn and fixed-income investors shifted to government bond havens. "The impact of COVID on the stock market isn't over yet," says Lori Calvasina, RBC Capital Markets' head of US equity strategy. "We're not saying it's going to derail the recovery. We don't think that, but we do think it could cause some additional bumps."
At 9:30 am ET the DJIA opened +47 after trading +160 early this morning, NASDAQ +14, S&P +4. 10 yr. 1.14% -5 bps. FNMA 2.5 30 yr. coupon at 9:30 +19 bps from yesterday’s close and 25 bps better than at 9:30 am ET yesterday.
Politicians continue to wrestle with the infrastructure bill; the bipartisan group of 22 senators hasn’t yet struck a deal on how to fully pay for the cost of the legislation, which would spend roughly $600B above projected federal spending on improvements to roads, bridges and broadband access, among others. Yesterday legislators said they weren’t sure what would happen if there wasn’t enough support Wednesday to begin debate on the infrastructure bill. Republicans have said they wouldn’t vote to start debate Wednesday unless an agreement largely has been fleshed out.
As noted yesterday, this week will be a volatile one.
PRICES @ 10:00 AM ET
10 yr. note: 1.16% -3 bp
5 yr. note: 0.65% -5 bp
2 Yr. note: 0.35% -3 bp
30 yr. bond: 1.80% -2 bp
Libor Rates: 1 mo. 0.085%; 3 mo. 0.134%; 6 mo. 0.151%; 1 yr. 0.241% (7/19/21)
30 yr. FNMA 2.0: @9:30 102.08 +27 bp (+30 bp from 9:30 am ET yesterday)
30 yr. FNMA 2.5: @9:30 104.05 +19 bp (+25 bp from 9:30 am ET yesterday)
30 yr. GNMA 2.5: @9:30 103.48 -14 bp (-7 bp from 9:30 am ET yesterday)
Dollar/Yuan: $6.4835 -$0.0070
Dollar/Yen: 109.56 +0.10 yen
Dollar/Euro: $1.1770 -$0.0030
Dollar Index: 93.12 +0.23
Gold: $1824.90 +$15.70
Bitcoin: 29,544 -1,144
Crude Oil: $66.04 -$0.38
DJIA: 34,453 +462
NASDAQ: 14,322 +47
S&P 500: 4297 +39
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.