October 29th, 2020 8:50 AM by Richard Sardella MLO.100007700/NMLS 233568
The 10 yr. opened trading this morning unchanged from yesterday at 0.78%, MBS prices at 9:00 am E.T., +8 bps from yesterday. Yesterday the 10 yr. note yield dropped to its strong technical resistance at 0.75%, then edged up a little. These days movements of 2 to 3 bps is a big deal with long-dated interest rates not moving for the last three months, making any move more interesting.
The Q3 GDP advance report at 8:30 am ET increased to +33.1% after Q2 declined 31.4%; personal consumption expenditures +40.7% yr./yr. from -33.2% in Q2. The Q3 improvement was widely expected; both the GDP and consumption expenditures were slightly better than estimates, although close enough.
Weekly jobless claims were estimated at 758K, as released 751K, down 40K from the previous week; the 4 wk. average at 787.5K, down from 812.25K the week before.
The two data points brought the stock indexes back to unchanged after the DJIA traded down 90 points before 8:30 am E.T.
The virus is hitting Europe hard; the recovery in euro-area economic confidence came to a halt, even before a resurgence of coronavirus infections forced strict new restrictions. The curbs are now threatening to pitch the region back into recession. Infections in the U.S. have escalated following Europe, but so far, there are no plans to shut down in the U.S., as is the case across Europe on most entertainment venues. Germany, France, Italy, Spain, and other southern European countries are battling what is being called the third wave. Scientists are warning that Europe's progression of the virus is running about three weeks earlier than in the U.S., worrying officials that the next few weeks will show substantial increases in the U.S.
A vaccine may be closer than what was thought. Moderna is on track to report early data from a late-stage trial of its COVID-19 vaccine candidate next month, the company said this morning, offering the clearest timeline yet on when the world will know whether the vaccine is effective. Its independent data monitoring committee is expected to conduct an interim review of its ongoing 30,000-volunteer late-stage trial in November. Moderna expects two-month safety data, as required by the U.S. Food and Drug Administration, in the second half of November, after which it will file for an emergency use authorization.
At 9:30 am ET, the DJIA opened +10 after falling 1,842 point the last four sessions; NASDAQ opened +84, S&P +12. 10 yr. at 9:30 am 0.78% unchanged. FNMA 2.0 30 yr. coupon at 9:30 am +8 bps from yesterday and -1 bp from 9:30 yesterday; the 2.5 coupon +5 bps from yesterday and -8 bps from 9:30 am yesterday. Within 10 minutes after the open, the DJIA was down over 200 points.
At 10:00 am Sept pending home sales, expected +3.3% after August's increase of 8.8%; as reported, sales dropped 2.2%, the first decline in the last five months.
Not new news, the 10 yr. remains bearish from our technical observations, needs to close below 0.75% to tilt toward possible lower rates. Lower rates, in this case, doesn't mean much. Interest rates are capped in narrow ranges and won't breach the range without a major change in the anticipations on the election.
PRICES @ 10:00 AM ET
10 yr. note: 0.79% +2 bp
5 yr. note: 0.34% +0.5 bp
2 Yr. note: 0.14% -1 bp
30 yr. bond: 1.57% +1 bp
Libor Rates: 1 mo. 0.147%; 3 mo. 0.214%; 6 mo. 0.244%; 1 yr. 0.327% (10/28/20)
30 yr. FNMA 2.0: @9:30 103.25 +8 bp (-1 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.22 +5 bp (-9 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.28 -5 bp (-14 bp from 9:30 yesterday)
Dollar/Yuan: $6.7100 -$0.0190
Dollar/Yen: 104.35 +0.03
Dollar/Euro: $1.1695 -$0.0052
Dollar Index: 93.85 +0.45
Gold: $1865.30 -$13.90
Crude Oil: $35.15 -$2.24
DJIA: 26,603 +83
NASDAQ: 11,134 +129
S&P 500: 3292 +20
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.