July 27th, 2021 1:41 PM by Richard Sardella MLO.100007700/NMLS 233568
The 10-yr. note yield was lower this morning, while MBS prices were higher. Volatility is continuing in the interest rate markets. Yesterday at about 3:30 pm ET after trading generally unchanged from morning levels and with no outward reason, the 10-yr. note yield increased from 1.26% to 1.30% in less than 30 minutes, while MBS prices that had been up +3 bps since 10 am dropped to -12 bps. This morning we stood at 1.25% for the 10 and +16 bps for MBSs by 8 am.
June durable goods orders at 8:30 am ,expected to be up +2.1%, was up just 0.8%. But May orders revised from +2.3% to +3.2%. Removing volatile transportation orders durables was expected to rise +0.8%. As released, it was only 0.3%. Core capital goods (ex food and energy), expected at 0.0 %, increased 0.5%.
The FOMC meeting begins this morning, with investors speculating about what the policy statement will reveal and what Powell has to say at his press conference. The focus is on how and when the Fed, presently being pushed to begin pulling back on its $120B a month buying of treasuries and MBSs, will start it. The most likely starting point would be in December or January. As they begin today's meeting, it will be a slow process -- not a swift dump. Fed officials have been talking about tapering and markets increasingly are expecting it. If, when, it starts we don’t expect tapering will have much direct impact on the rate markets. The last thing the Fed wants is to upset markets.
9 am revealed two home price indexes from May; FHFA home price index was expected +1.8%, as reported +1.7%; yr./yr. forecasts +15.9% increased 18.0%. And Case/Shiller May home price for 20 cities (expected +1.7%) reported +2.1%; yr./yr., +17.0% on estimates of +15.3%.
The DJIA opened down -176, The NASDAQ lost -38, S&P was down -16. The 10-yr. note stood at 1.24% down -6 bps. The FNMA 2.0 30-yr. coupon at 9:30 am ET added +19 bps from yesterday’s close and +2 bps from 9 am yesterday (FNMA 2.5 +13 bps from the close yesterday and -3 bps from 9:30 am yesterday).
At 10 am July Conference Board’s consumer confidence index, was expected at 124.9 from 127.3 in June; the index as released jumped to 129.1, the highest level since Feb 2020 before the pandemic. The Present Situation Index improved to 160.4 from 159.6 and the Consumer Expectations Index stayed unchanged at 108.4. Finally, the One-year Consumer Inflation Rate Expectations edged lower to 6.6% from 6.7%.
At 1 pm Treasury will auction $61B of 5-yr. notes.
Technically the 10- yr. note has solid support at 1.30%. Yesterday afternoon at 3:30 pm the 10-yr increased to 1.30% from 1.25% in a matter of 30 minutes, but this morning back down to 1.23%%. Our short term models remain bullish.
PRICES @ 10:00 AM ET
10 yr. note: 1.24% -6 bp
5 yr. note: 0.70% -3 bp
2 Yr. note: 0.21% unch
30 yr. bond: 1.90% -5 bp
Libor Rates: 1 mo. 0.087%; 3 mo. 0.131%; 6 mo. 0.157%; 1 yr. 0.238% (7/26/21)
30 yr. FNMA 2.0: @9:30 101.75 +19 bp (+3 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 103.92 +13 bp (-3 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 103.53 +13 bp (+1 bp from 9:30 yesterday)
Dollar/Yuan: $6.5030 +$0.0202
Dollar/Yen: 109.92 -0.46 yen
Dollar/Euro: $1.1801 -$0.0002
Dollar Index: 92.54 -0.11
Gold: $1803 +$4.70
Bitcoin: 38,616 -1,310
Crude Oil: $71.84 -$0.07
DJIA: 34,990 -154
NASDAQ: 14,712 -129
S&P 500: 4402 -20
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.