November 24th, 2021 9:34 AM by Richard Sardella MLO.100007700/NMLS 233568
8:30 am ET economic releases. Q3 preliminary GDP expected +2.1% and +2.1% is what we got. Weekly jobless claims dropped more than expected to 199K against estimates of 264K and down 71K from the prior week. Oct durable goods orders fell -0.5% on forecasts of +0.3%; excluding transportation orders +0.5% as expected, core capital goods expected +0.6% and reported +0.6%. Combined, the three reports didn’t move the interest rate markets or MBS prices, no change from yesterday at 9 am.
For the first time since the pandemic began weekly claims were less than prior to the lockdowns. The decline, along with near-record levels of job openings, signals strengthening demand for labor, according to the pundits talking this morning, the U.S. economy is still missing more than four million jobs compared with February 2020. As of mid-November, job postings on Indeed, a job-search site, were 52% above where they were ahead of the pandemic in February 2020, after adjusting for seasonal variation. Claims at the lowest level since 1969.
Earlier this morning MBA reported last week’s mortgage applications; the composite increased 1.8% after dropping 2.8% the week before; purchase application +5.0% and re-finance apps +0.4%.
October US trade deficit was expected -$94.6B, as reported -$82.9B. Imports +0.5% while exports increased 10.7%. Nice to see for a change.
At 9:30 am the DJIA opened -217, NASDAQ -117, S&P -24. 10 yr. note 1.68% +1 bp. FNMA 2.5 30 yr. coupon at 9:30 am -11 bps and -22 bps from 9:30 am yesterday. Normally the 9:30 am levels are what lenders set prices against; today it’s the data at 10 am that will drive the rest of the session. Traders didn’t wait for the 10 am data, pushing MBS prices down 17 bps at 9:45 am, 6 bps weaker than 9:30 am.
At 10 am October personal income, spending and PCE. Income expected +0.2%, spending +1.0%, PCE estimate +0.6%m/m and +5.0 yr./yr., core PCE thought to be +0.4% m/m and +4.1% yr./yr. As reported income increased 0.5%, spending +1.3%. Monthly PCE +0.6%, yr./yr. +5.0%; core PCE m/m +0.4% and yr./yr. +4.1%. Inflation continues to hold, this data right on forecasts that were estimated higher than in Sept.
Also, at 10 am October new home sales, expected 790K reported at 745K, Sept was revised to 742K from 800K originally reported. We will have details tis afternoon.
Finally, at 10 am the final November U. of Michigan consumer sentiment index was expected at 66.9, as released 67.4, still one of the lowest readings recently.
After all the data this morning there isn’t anything else on the schedule for the bond market to focus on until next week. Tomorrow closed for Thanksgiving; Friday the stock market will close at 1 pm, the bond market at 2 pm.
Crude prices rose yesterday after the Biden Administration announced that the U.S. and other countries would tap their petroleum reserves. Markets know that this political gesture won’t fix the supply shortage and could make it worse. Opening the SPR to release 50B of oil has fallen on blind eyes, +over $2.00 yesterday and unchanged this morning. Oil traders expect the Organization of the Petroleum Exporting Countries and Russia to respond in kind at their next meeting in December by reducing supply.
After all 10 am data the 10 yr. was holding at unchanged from yesterday at 1.68%. MBS prices though continued to slip, down 22 bps and -11 bps from 9:30 am.
The 10 yr. note is destined to increase to 1.75%, the high set in early April.
PRICES @ 10:15 AM
10 yr. note: 1.67% -1 bp
5 yr. note: 1.37% +3 bp
2 Yr. note: 0.65% +2 bp
30 yr. bond: 2.02% -2 bp
Libor Rates: 1 mo. 0.092%; 3 mo. 0.178%; 6 mo. 0.252%; 1 yr. 0.449% (11/23/21)
30 yr. FNMA 3.0: @9:30 am 103.44 -12 bp (-17 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 101.72 -11 bp (-22 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 101.72 -8 bp (-20 bp from 9:30 am yesterday)
Dollar/Yuan: $6.3919 unch
Dollar/Yen: 115.34 +0.22 yen
Dollar/Euro: $1.1202 -$0.0046
Dollar Index: 96.82 +0.33
Gold: $1782.30 -$1.50
Bitcoin: 56,118 -1,509
Crude Oil: $78.41 -$0.09
DJIA: 35,659 -155
NASDAQ: 15,656 -119
S&P 500: 4671 -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.