November 23rd, 2020 9:02 AM by Richard Sardella MLO.100007700/NMLS 233568
Interest rates edged a little higher this morning, stock indexes trading better at 8:00 am. This week, as you know, is a short week with Thanksgiving on Thursday and an early close Friday for the bond and mortgage markets. After Wednesday, noon markets will thin out, and many won't work until Monday next week. Wednesday is packed with critical data points; Today and tomorrow Treasury will auction $159B of notes (see calendar).
Another vaccine; AstraZeneca. The company fell behind its own forecasts over the last couple of months, but the more, the better when it comes to increased doses. It expects to have 4 million doses available in vials for the country (UK) by the end of the year, far fewer than the 30 million previously slated to be ready by September. In total, the company says it will have 20 million doses of bulk substance for the UK by the end of 2020, but those shots need to be filled into vials. By the end of the first quarter, it will have 300 million finished doses available worldwide. The vaccine uses a harmless common cold virus to deliver the coronavirus's spike protein to generate an immune response. AstraZeneca could play a key role in ending the global pandemic. It signed multiple manufacturing deals with companies and governments ranging from Japan to Russia to produce more than 3 billion doses.
More Republicans are calling for Trump to begin a transition to President-Elect Joe Biden -- or even concede defeat -- as Trump's long-shot legal challenges failed to gain traction. His various legal challenges are not going anywhere, and he is losing some of his allies. Republican Senator Pat Toomey congratulated Biden on his victory after Trump suffered another legal defeat in Pennsylvania. A minority of Republicans have spoken out, and several have taken a hedged stance that Trump should begin the transition even as the legal fight continues.
At 9:30 am ET, the DJIA opened +196, NASDAQ +77, S&P +21. 10 yr. 0.85% +2 bps. FNMA 2.0 30 yr. coupon -11 bps from Friday and -13 bps from 9:30 am ET Friday.
At 9:45 am ET, November Markit Manufacturing PMI (actual 56.7; prior 53.4) and November Markit Services PMI (actual 57.7; prior 56.9).
Eurozone's November flash Manufacturing PMI fell to 53.6 from 54.8 (expected 53.1) while flash Services PMI fell to 41.3 from 46.9 (expected 42.5). Germany's November flash Manufacturing PMI fell to 57.9 from 58.2 (expected 56.5) while flash Services PMI fell to 46.2 from 49.5 (expected 46.3). UK's November flash Manufacturing PMI rose to 55.2 from 53.3 (expected 53.3) while flash Services PMI fell to 45.8 from 52.3 (expected 52.3). France's November flash Manufacturing PMI fell to 49.1 from 51.3 (expected 50.1) while flash Services PMI fell to 38.0 from 46.5 (expected 37.7).
At 11:30 am ET, Treasury will auction $56B of 2s, then at 1:00 pm $57B of 5s.
All of this week's data happens on Wednesday. After that, the rest of the week should be quiet in the interest rate markets.
The 10 yr. note and MBSs remain in tight ranges; we are not expecting any major moves in either market through the week. MBS markets recently have performed better than treasuries, but technically mortgage prices are finding resistance when the 2.0 FNMA 30 yr. increases to 103.79 (presently 103.55). The 10 yr., is approaching its 40-day average at 0.80%; the note has not fallen below its 40 day since early August. Both technically and fundamentally still hold negative outlooks. The vaccines will continue to support the equity markets with a stronger economic outlook; interest rates will not fall much as long as the market expects a stimulus bill. The pressure is increasing from both parties to get more help quickly to suffering citizens.
PRICES @ 10:00 AM ET
10 yr. note: 0.85% -2 bp
5 yr. note: 0.38% +1 bp
2 Yr. note: 0.16% unch
30 yr. bond: 1.55% +3 bp
Libor Rates: 1 mo. 0.150%; 3 mo. 0.204%; 6 mo. 0.248%; 1 yr. 0.336% (11/20/20)
30 yr. FNMA 2.0: @9:30 103.53 -11 bp (-13 bp from 9:30 Friday)
30 yr. FNMA 2.5: @9:30 104.70 -2 bp (-5 bp from 9:30 Friday)
30 yr. GNMA 2.5 : @9:30 104.83 -9 bp (unch from 9:30 Friday)
Dollar/Yuan: $6.5774 +$0.0144
Dollar/Yen: 104.09 +0.24 yen
Dollar/Euro: $1.1852 -$0.0003
Dollar Index: 92.31 -0.08
Gold: $1844.90 -$27.90
Crude Oil: $42.85 +$0.43
DJIA: 29,501 +237
NASDAQ: 11,893 +39
S&P 500: 3577 +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.