November 16th, 2021 9:01 AM by Richard Sardella MLO.100007700/NMLS 233568
Two key economic releases at 8:30 am ET this morning, both hotter than forecasted. Oct retail sales expected +1.0% increased 1.7%, ex autos expected +0.9% increased 1.7%. October import and export prices; import prices expected +0.9% increased 1.2%, yr/yr prices +10.7% up frm 9.2% in Sept. Export prices were thought to be +0.7%, as reported +1.8%, yr/yr +18.0% frm Sept yr/yr 16.3%. The two reports add more confirmation that inflation is increasing. Still have several analysts and economists believing the Fed’s view that inflation won’t last, although those numbers are finally shrinking quickly. No longer are markets buying into the Fed’s missed inflation outlook. The initial reaction to the 8:30 am data didn’t generate much movement in the interest rate markets, but within 20 minutes of the releases MBS prices were down 11 bps frm yesterday.
On retail sales; consumers believing prices will increases more as the holiday approaches and may be the reason October retail sales were as strong as reported. Walmart’s comparable sales jumped 9.2% in the latest quarter and the retailer says it has plenty of inventory despite global supply-chain problems.
At 9:15 am October industrial production and capacity utilization; production expected +0.9% increased 1.6% (manufacturing expected +0.7% jumped 1.2%). Capacity utilization expected at 75.8% increased to 76.4%.
At 9:30 am the DJIA opened +71, NASDAQ -10, S&P unchanged. 10 yr note 1.63% +1 bp. FNMA 2.5 30 yr coupon at 9:30 am -5 bps, down 18 bps frm 9:30 am yesterday.
At 10 am November NAHB housing market index was expected unchanged frm October at 80, the index increased to 83.
Senate Banking Chairman Sherrod Brown said he was told by White House officials to expect an “imminent” announcement about President Joe Biden’s pick to chair the Federal Reserve. Current Chair Jerome Powell’s term ends in February, and Biden interviewed both him and Fed Governor Lael Brainard for the top job earlier this month. Treasury Secretary Janet Yellen has conveyed to White House officials that Brainard is a credible pick for Fed chair, but would still recommend Powell, according to other people familiar with the matter. Its news, but either pick won’t have any market impact until next year at the earliest, and then either one will do what the other would have done.
Biden signed the $1 trillion infrastructure bill yesterday as expected. The roughly $2 trillion healthcare, education and climate-change package is still being debated by Democrats in Congress. House Democratic leaders say they expect to vote on the bill this week and send it to the Senate, where it is expected to face changes. The legislation passed the House with the support of 13 Republicans. Nineteen Republicans backed the measure in the Senate.
Near term technicals are all bearish; so far today the 10 yr and MBS prices are hugging the unchanged level. The 10 yr note rate at 1.63% has increased 16 bps in rate since last Wednesday, maybe a pause today even with retail sales better and import and export prices increasing well over the forecasts. No change in the outlook, rates will continue to push higher, the next technical support for the 10 is at 1.70%.
PRICES @ 10:00 AM
10 yr note: 1.62% unch
5 yr note: 1.26% +1 bp
2 Yr note: 0.53% +1 bp
30 yr bond: 1.99% unch
Libor Rates: 1 mo 0.091%; 3 mo 0.157%; 6 mo 0.225%; 1 yr 0.394% (11/15/21)
30 yr FNMA 3.0: @9:30 am 103.86 -3 bp (-6 bp frm 9:30 am yesterday)
30 yr FNMA 2.5: @9:30 am 102.13 -5 bp (-18 bp frm 9:30 am yesterday)
30 yr GNMA 2.5: @9:30 am 101.88 -9 bp (-15 bp frm 9:30 am yesterday)
Dollar/Yuan: $6.3954 +$0.0122
Dollar/Yen: 114.52 +0.39 yen
Dollar/Euro: $1.1345 -$0.0021
Dollar Index: 95.70 +0.30
Gold: $1865.40 -$1.20
Bitcoin: 61,031 -2,850
Crude Oil: $80.62 -$0.26
DJIA: 36,271 +183
NASDAQ: 15,895 +42
S&P 500: 4699 +16
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.