October 18th, 2022 9:00 AM by Richard Sardella MLO.100007700/NMLS 233568
More volatility this morning, at 6:30 am ET the 10 yr. note yield at 4.04% +2 bps from yesterday; at 9 am 3.98% -2 bps. MBS prices at 9 am +27 bps. Once again yesterday afternoon MBS prices improved from 4 pm to 5 pm; at 4 pm FNMA 5.5 coupon was +23 bps, by 5 pm +56 bps. The pattern recently has been significant movement between 4 pm and 5 pm.
Stock indexes continued to increase in futures trading, at 9 am the DJIA +571, S&P +78. The improvement in stock indexes continues to add uncertainty. This morning Morgan Stanley’s Mike Wilson, a market bear, changing his outlook; saying US stocks are ripe for a short-term rally given the absence of an earnings capitulation. On the opposite side, JP Morgan’s Marko Kolanovic, among Wall Street’s most vocal bulls, has exhibited more caution for the coming months, citing increasing risks from central bank policies and geopolitics. Kolanovic, in effect, cut the size of his equity overweight and bond underweight allocations.
In the wider aspect, there is an increasing view from economists that inflation will make a U-turn late next year with inflation beginning to decline. Just reporting, that is way too far out to bank on it, although there are trades in long term options being placed that inflation will slow.
At 9:15 am Sept industrial production was stronger than forecasts, +0.4% against estimates of +0.1%. Sept capacity utilization expected at 80.0% increase, increased to 80.3%. Both encouraging data for the view the US economy remains resilient. Manufacturing output expected at +0.2% increased 0.4%.
At 9:30 am the DJIA opened +586, NASDAQ +283, S&P +82. 10 yr. 3.98% -3 bps. FNMA 5.5 30 yr. coupon +16 bps, and +3 bp from 9:30 am yesterday.
On Thursday EU leaders meet in a summit. The focus is an effort to cap prices of natural gas to cushion consumers from high prices and fill storage tanks next year ahead of winter. The measures seek to limit volatility on energy markets and boost the financial support that can flow to struggling consumers.
At 10 am Oct NAHB housing market index, expected at 44 from 46, the headline index fell to 38, the worst in years.
Volatility continues in rate and stock markets.
PRICES @ 10:00 AM
10 yr note: 3.98% -3 bp
5 yr note: 4.19% -5 bp
2 Yr note: 4.42% -3 bp
30 yr bond: 4.01% -1 BP
Libor Rates: 1 mo 3.48%; 3 mo 227%; 6 mo 4.674%; 1 yr 5.312% (10/17/22)
30 yr FNMA 6.0: 100.58 +22 bp (+6 bp from 9:30 am yesterday)
30 yr FNMA 5.5: 98.72 +16 bp (+3 bp from 9:30 am yesterday)
30 yr GNMA 5.5: 99.28 +9 bp (-11 bp from 9:03 am yesterday)
Dollar/Yuan: $7.1952 -$0.0012
Dollar/Yen: 149.02 -0.02 yen
Dollar/Euro: $0.9852 +$0.0009
Dollar Index: 111.90 -0.14
Gold: $1660.00 -$4.00
Bitcoin: 19,565 +38
Crude Oil: $83.89 -$1.64
DJIA: 30,765 +579
NASDAQ: 10,875 +199
S&P 500: 3747 +69
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.
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.