October 20th, 2020 8:50 AM by Richard Sardella MLO.100007700/NMLS 233568
Interest rates and stock indexes started higher this morning, the 10yr 0.78% +1 bp and the DJIA +112 at 8:30 am ET.
At 8:30 am ET, September housing starts and permits; starts not as strong as forecasts but up 1.9%. Starts expected at 1.463 mil, as reported 1.415 mil and August starts were revised lower, from 1.416 mil to 1.388 mil. Permits though, better than estimates at 1.553 mil on thoughts of 1.52 mil, August permits revised higher to 1.476 mil from 1.470 mil originally released. Single-family housing starts in September were at a rate of 1,108,000; this is 8.5 percent (±9.2 percent)* above the revised August figure of 1,021,000. The September rate for units in buildings with five units or more was 295,000. Completions in September were at a seasonally adjusted annual rate of 1,413,000. This is 15.3 percent (±11.4 percent) above the revised August estimate of 1,226,000 and is 25.8 percent (±11.5 percent) above the September 2019 rate of 1,123,000. In September, single-family housing completions were at a rate of 921,000; this is 2.1 percent (±9.0 percent)* above the revised August rate of 902,000. The September rate for units in buildings with five units or more was 480,000.
Stimulus? Still unlikely. Pelosi yesterday said today would be the day if a deal were to get done, although we have seen these deadlines and drop-dead comments many times since the discussions began that seems like six months ago. Steven Mnuchin and House Speaker Nancy Pelosi have talked for weeks and continue to do so. What do they talk about so much and for so many hours? Mnuchin is in the Middle East, calling Pelosi and trying to make one more attempt to work out something that seems like wasted breath and effort. There will not be any deal before the election, today was the drop-dead day, but tomorrow is yet another day. Republicans are talking about their own $500B stimulus that Dems will scuttle. Pelosi again listed a divide in principles on how to deploy stimulus money, while Trump again charged the speaker with holding back from agreement to gain an electoral advantage.
There isn't any market-driving news today; markets await Thursday's debate. Talks about a stimulus are not going anywhere and won't until after the election is settled. Will the results happen on election night? It's not very likely unless a landslide; polls are not reliable now, so a final count will likely drag on with the counting of absentee ballots. Joe Biden has put the lid on yesterday; he won't be seen now until Thursday night. The polling picture doesn't look great for Trump at the moment. He's down big in national polls and has consistently trailed Biden in several battleground states. But there's hope for Trump, too. The popular vote doesn't decide who will be president. Some of those swing state polls are close enough to indicate tossups on election night and beyond.
At 9:30 am ET, the DJIA opened +126, NASDAQ +52, S&P +16. 10 yr. at 9:30 am 0.78% +1 bp. FNMA 2.0 30 yr. coupon at 9:30 -3 bps from yesterday's close and -11 bps from 9:30 am yesterday; 2.5 30 yr. coupon at 9:30 am -3 bps from yesterday's close and -14 bps from 9:30 am yesterday.
The 10 yr. back at the top of its technical support at 0.79% this morning; we do not expect the rate will exceed 0.80% until the election. That said, the technical view remains bearish (although the support at 0.80% is holding and mortgage prices in tight trading ranges).
We don't expect much movement in the interest rate markets today; all attention now on the debate Thursday night and to a lesser extent the talks in Washington about a stimulus that we don't expect to be passed until later this year; some even espousing nothing will happen until February.
PRICES @ 10:00 AM ET
10 yr. note: 0.794% +2.3 bp
5 yr. note: 0.34% +1 bp
2 Yr. note: 0.15% -1 bp
30 yr. bond: 1.60% +4 bp
Libor Rates: 1 mo. 0.143%; 3 mo. 0.208%; 6 mo. 0.254%; 1 yr. 0.339% (10/19/20)
30 yr. FNMA 2.0: @9:30 103.05 -3 bp (-11 bp from 9:30 yesterday)
20 yr. FNMA 2.5: @9:30 104.38 -3 bp (-14 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.33 -12 bp (+10 bp from 9:30 yesterday)
Dollar/Yuan: $6.6814 -$0.0008
Dollar/Yen: 105.66 +0.23 yen
Dollar/Euro: $1.1820 +$0.0048
Dollar Index: 93.21 -0.21
Gold: $1903.90 -$7.80
Crude Oil: $40.46 -$0.37
DJIA: 28,414 +219
NASDAQ: 11,560 +80
S&P 500: 3456 +29
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.