November 25th, 2020 8:57 AM by Richard Sardella MLO.100007700/NMLS 233568
This morning, several economic reports began with weekly MBA mortgage applications; apps were strong, up 5.0% for the composite, +4.0% for purchases, and +3.9% for refinances.
At 8:30 am ET, weekly unemployment claims were higher than 730K at 778K +30K from the prior week. Continuing claims increased from 743.5 to 748.5K. The increase in claims, the first back to back increase.
October durable goods orders expected +0.9% increased 1.3%, ex transportation orders were strong, forecasts were +0.3% as released +1.3%. Core capital goods orders were thought to be +0.6% increased by 0.7%.
G3 preliminary GDP was unchanged from the advance release last month at +33.1%—the PCE annual rate of 40.6% was in line with estimates.
All that data at 8:30 am ET didn't generate any reaction in the stock and bond markets. Markets are focused on the transition from Trump to Biden. The WSJ is reporting this morning that within the Trump inner circle, he is increasingly coming to accept that Biden did win. President Trump is also saying he will continue to investigate election improprieties. On Monday, the Trump administration opened the transition efforts with the GSA now sharing all info to the Biden team and including them in daily national security updates.
Markets being buoyed by the reality that vaccines will be available with two to three weeks for very selected personal, but still questions about when they will be available to the public. How long it takes to manufacture and distribute in the planning stages.
At 9:30 am ET, the DJIA opened -85, NASDAQ +14, S&P -5. 10 yr. a 9:30 am unchanged at 0.88%. FNMA 2.0 30 yr. coupon at 9:30 am +6 bps from yesterday, and +6 bps from 9:30 am yesterday.
More data at 10:00 am ET; October new home sales expected at 975K from 959K in Sept; sales exploded to 999K. and Sept revised to 1.002 mil. The U. of Michigan consumer sentiment index expected at 77.2 was 76.9. October personal income expected +0.1% declined 0.7%, personal consumption expenditures expected +0.4% was +0.5%. PCE price index 0.0%, yr./yr. +1.2%. Core PCE 0.0%, yr./yr. +1.4%.
Of all of the appointments to Biden's cabinet, the most important is Janet Yellen to head Treasury, markets still cheering over the announcement. Yellen is almost certain to pursue tighter coordination with the US Federal Reserve next year -- repairing recent frictions -- though observers say she will be careful to avoid any specific move that could trigger a wave of Republican protests. The first step, of course, is to be confirmed. There's little doubt that Congress will confirm her. Closing the gap between the Fed and Treasury will be Yellen's first task; that recently has ebbed. The Fed wants more fiscal stimulus, current Sec. Mnuchin ended Treasury's money authorized by Congress through the Cares Act, upsetting the Fed. Does she have the legal authority to resurrect the funds? Mnuchin's latest plan to put unused Cares Act money into the department's general account, over which Congress has authority, clouds whether the unused funds can be pried out of Congress. Mnuchin last week said five Fed facilities must sunset at the end of next month, and asked for the central bank to return unused funding.
While all markets will trade regular hours today, trade volume will be thin as many are heading home at about noon, and many money managers, investors, and traders won't be back until next Monday. On Friday, stocks will trade normal hours, and the bond and mortgage markets will close early at 2:00 pm ET. Friday's trade will be flat and for day traders quiet boring.
Last night at 9:00 am ET, the 10 yr. note yield increased to 0.89%, once again testing its support at 0.90%, since last night some improvement, at 10:00 am 0.87% -1 bp. No change in our technical view; the interest rate market still slightly negative in our work. It has been that way for two months, but there has been very little directional movement. The 2.0 30 yr. FNMA coupon has a rock-solid resistance at 103.79 (this morning 103.61).
PRICES @ 10:05 AM ET
10 yr. note: 0.867% -2 bp
5 yr. note: 0.38% -2 bp
2 Yr. note: 0.16% unch
30 yr. bond: 1.59% -2 bp
Libor Rates: 1 mo. 0.143%; 3 mo. 0.232%; 6 mo. 0.254%; 1 yr. 0.335% (11/24/20)
30 yr. FNMA 2.0: @9:30 103.59 +6 bp (+6 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.63 +2 bp (-3 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.81 -5 bp (+1 bp from 9:30 yesterday)
Dollar/Yuan: $6.5763 -$0.0156
Dollar/Yen: 104.34 -0.10 yen
Dollar/Euro: $1.1907 +$0.12
Dollar Index: 92.04 -0.19
Gold: $1813.90 +$8.70
Crude Oil: $45.34 +$0.43
DJIA: 29,859 -191
NASDAQ: 12,034 -3
S&P 500: 3618 -17
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.