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Daily Market Analysis November 3, 2021

November 3rd, 2021 10:11 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

At 8:15 am ET ADP reported more jobs in October than were expected; the consensus was 400, as reported +571K, Sept jobs were revised lower, from 568K to 523K. The initial reaction was muted, the 10 yr. prior to the report 1.53% -2 bp from yesterday, at 8:45 1.54%. MBS prices saw no change from yesterday on the initial reaction. ADP and the BLS usually are not the same. Sometimes better, sometimes worse; the consensus for the BLS private jobs prior to the report this morning is the same as what ADP estimates were, 400K. Likely traders may increase their whisper numbers higher now.

Weekly MBA mortgage apps were down last week; the composite -3.3% from the prior week, purchase apps declined 2.0% while re-finances were down 4.0%. Higher rates and home prices contribute to the soft sales recently.

At 2 pm the FOMC policy statement. The withdrawing of $120B a month in treasuries and MBSs by the Fed is coming to an end, it won’t be a surprise this afternoon when the statement announces the tapering. The consensus is a reduction of $15B a month until the QE officially is over ($10B of treasuries and mortgage-backed securities by $5B). There isn’t golfing to be any change in interest rate outlooks, the Fed very likely to continue its outlook that inflation will go away soon. European Central Bank President Lagarde repeated her view that the spike in inflation is temporary and that conditions for a rate hike are unlikely to be met in 2022. Both major central banks standing firm compared to what the private sector analysts and economists are saying, that inflation will last a lot longer than central banks are thinking. The takeaway from the taper has been that once completed the Fed will then be able to raise the FF rate if needed, that though will be well into 2022. Two weeks ago Jerome Powell commented his baseline outlook remains for price pressures to abate as the economy reopens. “I do think it’s time to taper and I don’t think it’s time to raise rates.” PS, Pres. Biden is set to announce his pick for Fed chair next week, consensus is Powell will get the nod again.

Treasury announced today it is lowering its debt issuance for the quarterly refunding from $126B to $120B. The deepest cutbacks will be in seven-year and 20-year Treasuries, which had seen bigger increases in issuance during the ramping up of debt sales to meet Covid-19 needs. Twenty-year bonds rallied in the wake of the larger cuts to that sector, with their yields down about 3 basis points to around 1.94% at 9 am this morning, while those on 30-year bonds were off only about 2 basis points. Next week begins the quarterly refunding; $56 billion of three-year notes on Nov. 8, versus $58 billion in August, $39 billion of 10-year notes on Nov. 9, compared to $41 billion last quarter, $25 billion of 30-year bonds on Nov. 10, versus $27 billion in August; The refunding will raise $44.1 billion in new cash.

At 9:30 am the DJIA opened -69, NASDAQ -21, S&P -4. 10 yr. 1.54% unchanged. FNMA 2.5 30 yr. coupon at 9:30 am unchanged from yesterday but -10 bps from 9:30 am yesterday. NOTE, at 10 am -9 bps from yesterday and -20 bps from 9:30 am yesterday.

At 10 am October ISM non-manufacturing index, expected at 61.9 unchanged from Sept., the index jumped to 66.7 the best in years.

Not likely there will be any additional movement in the bond and mortgage markets until 2 pm this afternoon when the policy statement and Powell’s press conference.

PRICES @ 10:00 AM

10 yr. note: 1.55% unch

5 yr. note: 1.17% +2 bp

2 Yr. note: 0.48% +3 bp

30 yr. bond: 1.95% -1 bp

Libor Rates: 1 mo. 0.080%; 3 mo. 0.145%; 6 mo. 0.220%; 1 yr. 0.358% (11/2/21)

30 yr. FNMA 3.0: @9:30 am 104.31 -8 bp (-10 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.81 unch (-10 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.63 -6 bp (unch from 9:30 am yesterday)

Dollar/Yuan: $6.4014 +$0.0015

Dollar/Yen: 113.94 -0.1 yen

Dollar/Euro: $1.1574 -$0.0006

Dollar Index: 94.12 +0.03

Gold: $1767.70 -$21.70

Bitcoin: 61,878 -1,612

Crude Oil: $81.83 -$2.08

DJIA: 35,969 -84

NASDAQ: 15,647 -3

S&P 500: 4626 -4

About Richard Sardella

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.

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 3rd, 2021 10:11 AM

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