CHM Blog

Daily Market Analysis October 20, 2021

October 20th, 2021 9:01 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

Once the Asian markets began yesterday evening the 10 yr. note yield jumped to 1.67% at 8:30 pm ET, up from the US close at 1.64%. Since 8:30 pm yesterday the note edged lower to 1.62% -2 bps from 4:30 pm yesterday; at 9 am this morning mortgage prices traded +8 bps from yesterday’s decline of 8 bps. Although the ranges are small the rate markets showing some volatility.

Weekly MBA mortgage applications declined last week, higher interest rates and home prices pushed applications down 6.3% last week after the prior week flat. Purchase apps dropped 5.0% and re-finance applications down 7.0% from the previous week.

At 9:30 am the DJIA opened +30, NASDAQ +26, S&P +8. 10 yr. 1.64% unchanged from US trading yesterday. FNMA 2.5 30 yr. coupon at 9:30 am +6 bps from yesterday and -2 bps from 9:30 am yesterday.

There are no key economic data points today; this afternoon at 2 pm the Fed’s Beige Book will be released, mostly details from the 12 Fed districts but generally nothing new than what markets already know.

At 1 pm Treasury will auction $24B of 20 yr. bonds.

Today a lot of Q2 earnings reports. Political news currently about increasing the IRS gathering personal data collection at $10K from the original $600.00. No Republican on board, even moderate Dems are opposed to the increased snooping this administration is seeking.

Inflation; how much, when will it reverses from the current big increases, will inflation continue and prove the Fed and central banks wrong? Markets tilting to the reality that inflation isn’t going to ebb but continue to increase, yet with the Fed relentlessly defending its ‘transitory’ view keeps investors from completely buying into the longer inflation forecasts coming from increasing numbers of businesses warning prices are going higher. Inflation will increase and will last longer than what the Fed thinks; the Fed stands alone on inflation outlooks. Eurozone's September CPI was up 0.5% m/m, as expected (last 0.4%) and up 3.4% yr./yr., as expected (last 3.0%). September Core CPI was up 0.5% m/m, as expected (last 0.4%) and up 1.9% yr./yr., as expected (last 1.6%).

We don’t see anything currently that would cause interest rates to decline, even a little; the more likely outlook is higher rates. We are looking for the 10 yr. note to test its high back in April at 1.74%. Fundamentally, rate markets haven’t fully appreciated what is coming in wage increases; wages have to increase with prices to consumers increasing rapidly and workers increasingly voicing their demands; strikes beginning to escalate over wages; 10K workers struck John Deere last week.

PRICES @ 10:00 AM

10 yr. note: 1.64% unch

5 yr. note: 1.15% -1 bp

2 Yr. note: 0.39% unch

30 yr. bond: 2.11% +2 bp

Libor Rates: 1 mo. 0.085%; 3 mo. 0.129%; 6 mo. 0.167%; 1 yr. 0.292% (10/19/21)

30 yr. FNMA 3.0: @9:30 am 104.34 +5 bp (+6 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.45 +6 bp (-2 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.23 -19 bp (+2 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3927 +$0.0101

Dollar/Yen: 114.25 -0.11 yen

Dollar/Euro: $1.1645 +$0.0010

Dollar Index: 93.70 -0.03

Gold: $1780.20 +$9.70

Bitcoin: 65,989 +2,066

Crude Oil: $82.114 -$0.82

DJIA: 35,551 +94

NASDAQ: 15,113 -16

S&P 500: 4527 +8

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on October 20th, 2021 9:01 AM

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