November 17th, 2021 9:20 AM by Richard Sardella MLO.100007700/NMLS 233568
Rate markets began the day unchanged from yesterday, stock indexes fractionally lower.
Weekly MBA mortgage applications last week were down 2.8%, purchase apps +2.0%, re-finance apps -5.0%.
October housing starts and permits at 8:30 am ET; starts expected at 1.587 mil, as reported 1.520 mil and the Sept starts revised from 1.555 mil to 1.530 mil. Permits expected at 1.630 mil were better at 1.650 mil.
At 1 pm Treasury will auction $23B of 20 yr. bonds.
Not anything new this morning that has influence on the markets. On the powerful stock market, Goldman Sachs Group Inc. Chief Executive Officer David Solomon said that markets could face a rocky time ahead as the global economy seeks to emerge from the abrupt impact of the pandemic. “When I step back and think about my 40-year career, there have been periods of time when greed has far outpaced fear -- we are in one of those periods,” … “My experience says those periods aren’t long lived. Something will rebalance it and bring a little bit more perspective”… “Chances are interest rates will move up, and if interest rates move up that in of itself will take some of the exuberance out of certain markets.”
Interest rate markets in the last couple of days digesting the spike higher last week. The yield on the benchmark 10-year U.S. Treasury note settled yesterday at 1.632%, up slightly from 1.621% Monday after logging larger gains in the previous three sessions. Inflation outlooks still dominate, some expecting inflation to moderate in the coming years, as consumer spending slows, manufacturers step up the production of goods, and transportation companies add capacity reducing supply chain snarls. Most though expect inflation to last much longer than any positive forecast(s). As it stands, the 10-year yield is up from around 1.13% in August. But it remains below 1.74% level it reached at the end of March, when inflation still looked relatively tame, but investors were feeling bullish about the economy. We’ll stay with our outlook that inflation isn’t going away for at least a year, the Fed will increase the FF rate twice next year, the 10 yr. note will edge up to test the highs in October (1.70%). On the equity markets, not sure; too much greed as commented by Goldman’s CEO in the paragraph above. In the immediate moment inflation is increasing; adapting the view that inflation won’t last long is a guess, not based on any comparable past events.
Annual inflation in the U.K. accelerated to its fastest rate in a decade, consumer prices increased 4.2% on the year in October following a 3.1% rise in September, inflation isn’t confined to the US, its global. The Bank of England will be the first major central bank to lift interest rates from pandemic lows as worries over global inflation intensify. The Bank almost pulled the plug and increased rates at its latest meeting, only to hold off at the last minute.
At 9:30 am the DJIA opened -55, NASDAQ -5, S&P -3. 10 yr. 1.64% unchanged. FNMA 2.5 30 yr. coupon +6 bps from yesterday and +7 bps from 9:30 am yesterday.
By 10 am the 10 yr. yield dipped 1 bp and MBS prices were +9 bps, a couple of bps better.
PRICES @ 10:00 AM
10 yr. note: 1.63% -1 bp
5 yr. note: 1.26% -1 bp
2 Yr. note: 0.52% +1 bp
30 yr. bond: 2.03% unch
Libor Rates: 1 mo. 0.088%; 3 mo. 0.160%; 6 mo. 0.227%; 1 yr. 0.399% (11/16/21)
30 yr. FNMA 3.0: @9:30 am 103.88 -3 bp (+2 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 102.20 +5 bp (+7 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 102.17 -23 bp (+29 from 9:30 am yesterday)
Dollar/Yuan: $6.3786 -$0.0138
Dollar/Yen: 114.62 -0.21 yen
Dollar/Euro: $1.1320 unch
Dollar Index: 95.87 -0.04
Gold: $1867.10 +$13.00
Bitcoin: 59,800 +197
Crude Oil: $80.04 -$0.72
DJIA: 36,012 -132
NASDAQ: 15,930 -44
S&P 500: 4688 -12
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.