October 29th, 2021 9:21 AM by Richard Sardella MLO.100007700/NMLS 233568
Consumer spending in Sept increased 0.6%, slight better than 0.5% estimates, but down from +0.8% in August. Personal income dropped from forecasts of -0.1% to -1.0%. The Sept PCE +0.3% on forecasts of 0.4%, yr./yr. +4.4% on thoughts of +4.5%; excluding food and energy PCE +0.2% as expected, yr./yr. +3.6% also a fraction lower than +3.7% estimates. Prior to the report at 8:30 am ET the 10 yr. note at 1.61% +4 bps and MBS prices down 14 bps from yesterday; by 8:45 am MBS prices down 31 bps. The slippage in August driven by the Delta variant which peaked in the middle of September and is now abating. The continuing backup in supply chains has caused shortages and increased inflation, crimping people’s ability to get the products they want to buy.
Democrats got the skeleton of a spending bill at $1.75 trillion but no specifics, a vote on a bill may not take place for weeks. The WSJ editorial this morning totaling the actual amount of the bill will be closer to $4 trillion. Progressives formally endorsed the bill that is half the size they originally wanted. The $550B spending for needed roads, bridges, rail, internet and electric power expansion is tied to the big spending bill.
At 9:30 am the DJIA opened -68, NASDAQ -120, S&P -25. 10 yr. 1.60% +3 bps. FNMA 2.5 30 yr. coupon at 9:30 am -25 bps and -36 bps from 9:30 am yesterday.
At 9:45 am the October Chicago purchasing mgrs. index, expected at 64.2 from 64.7 in Sept; a big increase to 68.4.
At 10 am the October final U. of Michigan consumer sentiment index was thought to be unchanged from mid-month at 71.4, as reported 71.7.
Four weeks ago the 10 yr. began increase, from 1.35% to 1.70%---35 bps from 9/23 to 10/23; from 10/23 to this last Tuesday the yield dropped 22 bps. Now rates are about to turn higher and retrace back to 1.70%. The longer outlook for interest rates presently is that they are going to move higher. Next Wednesday the FOMC is expected to confirm and outline how the Fed will end its monthly purchases of treasuries and MBSs; Joe Powell’s press conference. The ECB said yesterday it isn’t anywhere ready to increase rates, setting a potential split from what the Fed is thinking.
PRICES @ 10:00 AM
10 yr. note: 1.59% +2 bp
5 yr. note: 1.23% +5 bp
2 Yr. note: 0.54% +5 bp
30 yr. bond: 1.96% unch
Libor Rates: 1 mo. 0.086%; 3 mo. 0.131%; 6 mo. 0.193%; 1 yr. 0.370% (10/28/21)
30 yr. FNMA 3.0: @9:30 am 104.19 -11 bps (-15 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 102.33 -25 bp (-36 bp from 9:30 am yesterday) (@10:00 AM -27 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 am 102.22 -16 bp (-22 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4017 +$0.0098
Dollar/Yen: 113.96 +0.39 yen
Dollar/Euro: $1.1626 -$0.0054
Dollar Index: 93.71 +0.36
Gold: $1776.10 -$26.50
Bitcoin: 61,277 -188
Crude Oil: $82.36 -$0.41
DJIA: 35,748 +17
NASDAQ: 15,366 -82
S&P 500: 4585 -12
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.