October 14th, 2021 11:40 AM by Richard Sardella MLO.100007700/NMLS 233568
Two key data points at 8:30 am ET this morning; weekly jobless claims were thought to be at 320K down from 329K the week before, claims as reported dropped to 293K a decline of 36K from the previous week. Claims finally getting below 300K for the first time since the pandemic, prior to the lockdowns claims had been averaging around 220K for months.
Sept PPI data didn’t show increases as most expected with the increased fears of inflation. Monthly PPI was expected +0.5%, it increased 0.5% and down from 0.7% in August; yr./yr. PPI expected +8.7% increased 8.6% but was up from 8.3% in August. Excluding the core (food and energy) expected +0.5% increased just 0.2% and down from 0.6% in August; yr./yr. +6.8% against forecasts of +7.1% but up 0.1% from August’s 6.7%. Excluding food, energy and trade services +0.1% against 0.4% expected and down from 0.3% in August; yr./yr. +5.9% from 6.3% in August.
The initial reaction to the two reports kept the 10 yr. unchanged from yesterday at 1.54% while MBS prices were +6 bps from yesterday at 9 am.
Stocks in futures trading this morning rallying on very strong earnings from banks; at 9 am the DJIA up 300 points from yesterday.
At 9:30 am the DJIA opened +411, NASDAQ +141, S&P +42. 10 yr. note 1.53% -1 bp. FNMA 2.5 30 yr. coupon +6 bps and +27 bps from 9:30 am yesterday.
According to the Energy Information Administration, nearly half of U.S. households that warm their homes with mainly natural gas can expect to spend an average of 30% more on their bills compared with last year. That’s inflation and tied to the recent and climbing food costs consumers are going to feel it in the purse.
The 10 yr. now trading below its 20 day moving average for the first time in a month; the 9 day RSI back to neutral (neither bullish or bearish). MBS prices rallied yesterday and so far this morning holding a small price improvement from yesterday. The PPI this morning not quite as negative concerning inflation increasing. Stocks on fire on the bank earnings reported yesterday. It is a mixed bag of news to digest for traders, that interest rates are not increasing but also not declining confirms a presently balanced rate market. MBS prices yesterday and today reflecting adjustments to hedge positions that look like they were tilted toward increasing rates in the very near term.
PRICES @ 10:00 AM ET
10 yr. note: 1.54% unch
5 yr. note: 1.06% -1 bp
2 Yr. note: 0.36% unch
30 yr. bond: 2.04% +1 bp
Libor Rates: 1 mo. 0.090%; 3 mo. 0.124%; 6 mo. 0.157%; 1 yr. 0.266% (10/13/21)
30 yr. FNMA 3.0: @9:30 am 104.44 +5 bp (+24 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 102.80 +6 bp (+27 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 102.58 +8 bp (+24 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4398 +$0.0117
Dollar/Yen: 113.59 +0.33 yen
Dollar/Euro: $1.1599 unch
Dollar Index: 93.98 -0.10
Gold: $1796.70 +$2.00
Bitcoin: 57,396 +316
Crude Oil: $80.86 +$0.42
DJIA: 34,768 +390
NASDAQ: 14,764 +193
S&P 500: 4417 +53
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.