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Daily Market Analysis November 28, 2022

November 28th, 2022 8:56 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

10 yr. note began the US Day -1 bp at 3.68% after diving to 3.62% overnight, driven by increasing unrest in China over the government COVID lockdowns. MBS prices started unchanged but by 9 am ET +14 bps from Friday. Stock indexes in futures trading, the DJIA -204.

China’s unrest is increasing with larger protests, anger against China’s Covid curbs erupted in protests that risk triggering a government crackdown. The reaction is global with stock markets declining and some safe haven moves into US treasuries. While it’s unclear how Beijing will respond to the surge in discontent, the threat of rising social instability is putting traders on edge.

This week has several key data pints after last week with no economic news. Friday Nov employment data leads the news. In the meantime, tomorrow consumer confidence index, Wednesday Q3 GDP, ADP private jobs for Nov, Thursday Oct PCE inflation data, if estimates hold inflation in October less than in Sept.

Jerome Powell scheduled to speak on Wednesday, it’s a conference on the labor market but of course he will speak to the Fed’s rate increase outlook. Expect him to echo what all Fed officials have been saying for weeks, slowing of rate increases (50 bp in Dec). With inflation still way above the central bank’s 2% target he will likely remind any talk of a downshift with a warning that rates will have further to rise next year. Expectations that the Fed will slow down next month with rates peaking around 5% next year from the current range of 3.75% to 4.00%, according to pricing of contracts in futures markets. Some at the Fed still are voicing that rates may have to increase more than the current consensus. FOMC meeting Dec 13th and 14th.

At 9:30 am the DJIA opened -116, NASDAQ -68, S&P -25. 10 yr. at 9:30 am 3.68% -1 bp. FNMA 6.0 30 yr. coupon at 9:30 am +19 bp and +20 bps from 9:30 am Friday; FNMA 5.5 coupon +8 bp and 15 bp from 9:30 am Friday.

Crude oil continues to decline, the lowest levels now going back to 2020. Demand expected to lessen as global economies slow. China’s economic outlook is continuing to slow with COVID shutdowns.

There isn’t anything on the calendar today. China’s unrest is the headline for now, although its isn’t likely the rate markets will benefit from it. This week has several key economic releases, culminating with Nov employment data. On Wednesday Jerome Powell’s speech isn’t expected to shed any different light on what markets presently expect the Fed will do with rates.

PRICES @ 10:00 AM

10 yr note: 3.68% -1 bp

5 yr note: 3.87% unch

2 Yr note: 4.45% -3 bp

30 yr bond: 3.72% -2 bp

Libor Rates: 1 mo 4.055%; 3 mo 4.734%; 6 mo 5.219%; 1 yr 5.598% (11/25/22)

30 yr FNMA 6.0: 102.00 +19 bp (+20 bp from 9:30 am Friday)

30 yr FNMA 5.5: 100.92 +8 bp (+15 bp from 9:30 am Friday)

30 yr GNMA 5.5: 100.83 +6 bp (+17 bp from 9:30 am Friday)

Dollar/Yuan: $7.2101 +$0.0447

Dollar/Yen: 138.50 -0.69 yen

Dollar/Euro: $1.0435 +$0.0036

Dollar Index: 105.81 -0.15

Gold: $1750.40 -$3.60

Bitcoin: 16,254 -315

Crude Oil: $74.6 -$1.61

DJIA: 34,190 -157

NASDAQ: 11,187 -39

S&P 500: 4002 -24

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 28th, 2022 8:56 AM

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