October 2nd, 2020 9:49 AM by Richard Sardella MLO.100007700/NMLS 233568
Before the employment report, the DJIA -340, 10 yr. 0.66%, MBS prices +5 bps from yesterday.
At 8:30 am ET Sept employment data: The unemployment rate expected +8.2% declined to 7.9%, non-farm jobs expected at 894K at 661K, August FP jobs were revised better to 1.489 mil from 1,371 mil originally released. Private jobs were thought to be +900K as released +887K. Manufacturing jobs were stronger than thought, +66K twice as strong as 33K estimates. The labor participation rate slipped to 61.4% from 61.7% in August. Average hourly earnings dropped from 0.3% in August to +0.1%, yr./yr. earnings +4.7%. Yesterday August's personal income dropped 2.7% as unemployment checks slowed.
The House passed its stimulus bill yesterday, $2.2 trillion. The legislation passed 214-207, with 18 Democrats joining Republicans in opposition to the bill. It's still a non-starter with Republicans who are unwilling to support funding for states and local governments that Republicans believe are poorly run states that shouldn't be rewarded for their poor management. The Democratic bill would give money to state and local governments; Republicans are willing to help states, but not to the Democrats' level. Meanwhile, the Fed continues to push for more stimulus and saying if not, the economic outlook will slow. Yesterday's August personal income and spending both suggested the expansion is slowing, and consumer savings that had been increasing declined (consumers using savings suggests income isn't enough to get by). It is just one month, but these days financial markets are skittish when any news doesn't support investor sentiment.
At 9:30 am ET, the DJIA opened -350, NASDAQ -206, S&P -48. 10 yr. at 9:30 am 0.67% -1 bp. FNMA 2.0 30 yr. coupon at 9:30 -2 bps from yesterday's close but +19 bps from 9:30 am yesterday.
At 10:00 am ET, the U. of Michigan consumer sentiment index increased to 80.4 from 78.9 and better than forecasts of 79.0.
Early this morning, the 10 yr. note yield declined to 0.65% -3 bps on the Trump news, and MBS prices opened +7 bps. Now the 10 yr. yield is increasing, at 0.69% +1 bps. MBS prices gave back all of the early gains. Twenty minutes after the stock market opened at 9:30 am ET, the DJIA and the other two indexes are improving from the opening lows. The market shock of Trump's infection may generate increased volatility today. Everyone now has to re-access their opinions on the election outcome; there are still 29 days before the election, and given what surprises we have seen over the last couple of weeks, making a hard and fast decision isn't advisable now.
PRICES @ 10:00 AM ET
10 yr. note: 0.69% +1.5 bp
5 yr. note: 0.28% unch
2 Yr. note: 0.13 unch
30 yr. bond: 1.49 +3 bp
Libor Rates: 1 mo. 0.139%; 3 mo. 0.234%; 6 mo. 0.250%; 1 yr. 0.359% (10/1/20)
30 yr. FNMA 2.0: @9:30 103.47 -2 bp (+18 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.92 +2 bp (+9 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.69 +2 bp (+10 bp from 9:30 yesterday)
Dollar/Yuan: $6.7907 unch
Dollar/Yen: 105.28 -0.27 yen
Dollar/Euro: $1.1716 -$0.0031
Dollar Index: 93.81 +0.09
Gold: $1911.30 +$15.80
Crude Oil: $37.29 -$1.43
DJIA: 27,670 -147
NASDAQ: 11,207 -119
S&P 500: 3357 -23
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.