November 29th, 2021 9:42 AM by Richard Sardella MLO.100007700/NMLS 233568
Stocks and bonds experienced huge moves last Friday, driven by the new variant of COVID, named Omicron. DJIA -905, 10 yr. note yield 1.48% -16 bps, MBS prices +77 bps. This morning some rebounds, the 10 began the day at 1.54% +6 bps and MBS prices -20 bps. DJIA at 9 am ET +355. Crude oil fell $11.00 Friday, early trade this morning +$4.30.
At 9:30 am ET the DJIA opened +364, NASDAQ +235, S&P +58. 10 yr. 1.56% +8 bps recovering half the decline on Friday. MBS prices on Friday gained 77 bps, at 9:30 am FNMA 2.5 30 yr. coupon -23 bps and from 9:30 am Friday +1 bp. Last Friday crude oil declined $11.00, at 9:30 am +$4.20.
At 10 am October pending home sales, expected to have increased 0.7% from Sept, as reported sales jumped 7.5%. Buyers moving quickly to capture interest rates as they continued to increase.
The new COVID variant reported last week rattled global markets, just when the delta variant has become understandable a new one crops up. People infected by omicron in South Africa are showing very different symptoms to those suffering from the delta strain. The World Health Organization is analyzing the new mutation and has said it’s too early to say how transmissible and severe it is. It’s called on countries to start testing widely for omicron, saying the divergent design could fuel future surges of Covid-19. Scientists advising South Africa’s government told a media briefing today that while omicron appeared to be more transmissible, cases appear to be very mild.
On the inflation concerns: Allianz SE’s Mohamed El-Erian urged the Federal Reserve to acknowledge that inflation isn’t transitory and “ease your foot off the accelerator starting now.” El-Erian, who expressed support for Lael Brainard over renominated Fed Chair Jerome Powell, said on “Fox News Sunday” that a new person in charge of the U.S. central bank might have found it easier to change course. “Inflation is not transitory and it’s really important for the Fed to realize this,” he said. We have continually said here that inflation isn’t “transitory” as the Fed has constantly espoused, the best we can see is inflation levels will level off next year but will but decline unless the Fed changes its slow response. El-Erian has repeatedly said the Fed is underestimating inflation risks as the U.S. economic recovery.
This week promises to be a volatile one. Presently there isn’t enough known about the new variant that will continue to evolve through the week. On Friday the Nov employment data, will it matter as much given the current situation? It is Nov data that preceded the current new worries. How will investors confront the unexpected news? Leverage in the equity markets was on full display last Friday, as prices dropped the algorithms triggered margin calls that added to the selling pressures; interest rates fell as those trading platforms drove strong buying to safe treasuries. Tomorrow both Powell and Yellen will be speaking.
PRICES @ 10 AM
10 yr. note: 1.55% +7 bp
5 yr. note: 1.22% +6 bp
2 Yr. note: 0.53% +3 bp
30 yr. bond: 1.89% +6 bp
Libor Rates: 1 mo. 0.090%; 3 mo. 0.175%; 6 mo. 0.246%; 1 yr. 0.410% (11/26/21)
30 yr. FNMA 3.0: @9:30 am 103.69 -5 bp (+3 bp from 9:30 am Friday)
30 yr. FNMA 2.5: @9:30 am 102.23 -27 bp (+1 bp from 9:30 am Friday)
30 yr. GNMA 2.5: @9:30 am 102.17 -23 bp (-3 bp from 9:30 am Friday)
Dollar/Yuan: $6.3863 -$0.0067
Dollar/Yen: 113.83 +0.47 yen
Dollar/Euro: $1.1265 -$0.0052
Dollar Index: 96.36 +0.27
Gold: $1787.20 +$1.70
Bitcoin: 57,042 +2,106
Crude Oil: $72.29 +$4.14
DJIA: 34,999 +100
NASDAQ: 15,725 +233
S&P 500: 4637 +43
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.