July 30th, 2021 9:10 AM by Richard Sardella MLO.100007700/NMLS 233568
Prior to the 8:30 am ET data this morning the 10 yr. note yield traded at 1.24% -3 bps and MBS prices were up 5 bps from yesterday.
At 8:30 am June personal income and spending; income was expected to have declined 0.7% as reported +0.1%, spending expected +0.6% increased 1.0%. The Fed’s favorite inflation read each month, the personal consumption expenditures (PCE) was thought to be +0.6%, as reported +0.5%, yr./yr. forecasts were +4.1% as reported +4.0%. When food and energy are extracted (the core) estimates were an increase of 0.5%, the report was +0.4%; yr./yr. thought to be +3.7% hit at +3.5%. The report confirms inflation isn’t increasing but holding about where it has been over the last two months and exceeds the 2.0% Fed target. Jerome Powell earlier this week noted inflation would be above 2.0% but is transitory and will ebb back once the supply chain improves. The unanswered question still hangs over markets, what is the definition of transitory, weeks, months, years?
U.S. households boosted spending last month, though the current increase in Covid-19 cases related to the Delta variant and higher inflation are injecting uncertainty into the economic outlook.
Also at 8:30 am this morning Q2 employment cost index; forecasts were +0.9%, as released +0.7%; yr./yr. expected +2.8% as reported +2.9%.
At 9:30 am the DJIA opened -65, NASDAQ -146 (weaker Amazon report yesterday), S&P -27. 10 yr. at 9:30 am 1.25% -2 bps. FNMA 2.0 30 yr. coupon at 9:30 am +13 bps and +23 bps from 9:30 am yesterday; the 2.5 coupon +6 bps and +11 bps from 9:30 am yesterday.
At 9:45 am July Chicago purchasing mgrs. index forecasts were for the index at 66.1 the same as in June, the index shot up to 73.4. There wasn’t any immediate reaction to strong increase.
At 10 am the final July U. of Michigan consumer sentiment index was expected unchanged from mid-month at 80.8, as released 81.2.
The resurgence of new concerns about COVID caused by the fast-spreading Delta variant is causing some angst with analysts and economists as they go back to the drawing board. The mask mandates are coming back, the Biden administration now requiring federal workers to be vaccinated or be tested once a week. A unique combination of mutations has led to this more infectious version of the coronavirus, prompting revised mask guidelines.
PRICES @ 10:00 AM ET
10 yr. note: 1.24% -3 bp
5 yr. note: 0.70% -3 bp
2 Yr. note: 0.20% -1 bp
30 yr. bond: 1.90% -3 bp
Libor Rates: 1 mo. 0.095%; 3 mo. 0.125%; 6 mo. 0.153%; 1 yr. 0.237% (7/29/21)
30 yr. FNMA 2.0: @9:30 101.98 +13 bp (+23 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.13 +6 bp (+11 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 103.69 +5 bp (+28 bp from 9:30 yesterday)
Dollar/Yuan: $6.4617 +$0.0053
Dollar/Yen: 109.65 +0.17 yen
Dollar/Euro: $1.1885 -$0.0003
Dollar Index: 91.94 +0.07
Gold: $1830.70 -$0.50
Bitcoin: 38,889 -709
Crude Oil: $73.84 +$0.22
DJIA: 35,066 -18
NASDAQ: 14,712 -64
S&P 500: 4408 -11
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.