November 30th, 2020 10:41 AM by Richard Sardella MLO.100007700/NMLS 233568
Last Friday the 10 yr. dropped 4 bps, and MBS prices increased 25 bps. This morning the 10 yr. started at 0.85% +1 bps, and MBS prices are down 6 bps.
This is employment week, and Jerome Powell will testify on the Coronavirus Aid, Relief, and Economic Security Act before the Committee on Banking, Housing, and Urban Affairs at U.S. Senate on Tuesday; and on Wednesday at the Committee on Financial Services, U.S. House of Representatives. His testimony is very critical to markets, divide between Treasury and the Fed over relief spending and what he has to add or suggest.
Congress has a plate full before it closes for the holidays; on Dec 11th the temporary funding to keep the government open will expire, always a lot of talk about the continuing debt issues, but at the end of the day, the political parties will continue to kick the can forward. Last week, lawmakers agreed on overall spending levels, which should clear the way for multiple subcommittees to hash out details and avoid the risk of a partial government shutdown. A possible, but unlikely, another stimulus package that isn't close to an agreement; and the annual defense authorization. Also, there is a $2B border wall funding that will be argued; even if it were to pass, the Biden administration wouldn't use it to add to the Wall.
Biden is expected to unveil his picks for several top economic positions as early as today; he will also finally receive his first classified intelligence briefing, an essential step towards taking control of national security. He will announce Janet Yellen, the first woman to chair the Federal Reserve, as his Treasury secretary, and Adewale Adeyemo, the first Black deputy Treasury secretary.
At 9:30 am ET, the DJIA opened -167, NASDAQ +34, S&P -7 bps. 10 yr. 0.85% unchanged. FNMA 2.0 30 yr. coupon at 9:30 am +3 bps from Friday's close, and +21 bps from 9:30 am Friday morning.
At 9:45 am ET Nov Chicago PMI index expected at 59.2 from 61.1; as released, it weakened to 58.2.
At 10:00 am ET October pending home sales from NAR: expected +2.0% from -2.2% in Sept.; sales were down 1.1%; annually +20.2%.
Financial markets following every burp about the political climate but with little direct interest in the continual differences and constant comments. The markets are always a step ahead, focusing on the huge differences between the Trump presidency and what the Biden administration may do. The equity markets are setting new all-time highs. The interest rate markets essentially unchanged, keeping within the narrow ranges. According to Jerome Powell and other Fed officials, low rates are here to stay until at least 2023. Defining low-interest rates is where the uncertainty lies. The trend of the 10 yr. note is up. It has been increasing slowly since mid-August; it has not traded below its 40-day average since early August, and there is a key uptrend line that we deem very important; today 0.80%. The 2.0 FNMA 30 yr. coupon has heavy resistance at where it is trading this morning (103.79), it has tested that price four times since August.
PRICES @ 10:00 AM ET
10 yr. note: 0.85% unch
5 yr. note: 0.37% unch
2 Yr. note: 0.15% unch
30 yr. bond: 1.58% +1 bp
Libor Rates: 1 mo. 0.154%; 3 mo. 0225%; 6 mo. 0.257%; 1 yr. 0.330% (11/27/20)
30 yr. FNMA 2.0: @9:30 103.77 +3 bp (+21 bp from 9:30 Friday)
30 yr. FNMA 2.5: @9:30 104.75 +3 bp (+12 bp from 9:30 Friday)
30 yr. GNMA 2.5: @9:30 104.95 -5 bp (+15 bp from 9:30 Friday)
Dollar/Yuan: $6.5804 +$0.0034
Dollar/Yen: 104.26 +0.17 yen
Dollar/Euro: $1.1988 +$0035
Dollar Index: 91.61 -0.18
Gold: $1772.80 -$15.30 (bit coin is the current trend)
Crude Oil: $45.27 -$0.26
DJIA: 29,655 -275
NASDAQ: 12,197 -9
S&P 500: 3623 -15
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.