October 4th, 2021 9:49 AM by Richard Sardella MLO.100007700/NMLS 233568
10 yr. note opened in the US at 1.48% +2 bps; early trade in MBSs -3 bps from Friday. Stock indexes in futures trade generally unchanged at 9 am ET.
This week’s calendar is thin until Friday, focus in markets on Friday’s Sept employment data.
Coming to a head; the Democrats finally have to capitulate on the $3.5 trillion social spending package. It was inevitable if any kind of spending bill would pass. Weighing two different approaches to reduce its overall cost: eliminating proposed programs entirely or cutting their duration. President Biden said Friday that they would have to shrink the size of the legislation, after weeks of negotiations within the Democrat party and no agreements were achieved and the clock ticking and Republicans holding their line, the end of the day will be a much lower bill that will lead to a vote. The current thought now is a bill that will total about $2 trillion give or take. It is no market surprise, there was never a serious belief Democrats would get all their progressive wants in the bill. Progressive Democrats, who backed the $3.5 trillion level, acknowledged Sunday the need to scale back the legislation to reach a compromise, though they said there’s no agreement on how much.
Interest rate markets continue to focus on inflation, it is increasing. The issue remains about how long it will exist and how much increase may still be out there. Inflation as measured by the Labor Department’s consumer-price index was 5.3% in the 12 months through August, close to the highest in 12 years. It is still the consensus among economists, led by the Fed, that the present bump up in prices won’t last long; some economists even point that inflation is a leading indicator of an economy poised to grow. Fed Chairman Jerome Powell, asked last week whether inflation is now broader and more structural than earlier this year, responded, “Yes, I think it’s fair to say that it is.”
At 9:30 am the DJIA opened -61, NASDAQ -83, S&P -11. 10 yr. at 9:30 1.49% +3 bp. FNMA 2.5 30 yr. coupon -6 bps from Friday but+11 bps from 9:30 am Friday morning.
At 10 am August factory orders were thought to be up 1.0%; as released 1.2%.
The 10 yr. note is continuing to consolidate its spike higher; support for the note at 1.55%, resistance 1.44%. With employment on Friday and the political uncertainty over the spending bills this week the 10 and MBSs should remain in their respective ranges; 10 yr. 1.44% to 1.55%. There still isn’t any solid consensus in markets about inflation outlooks.
PRICES @ 10:00 AM ET
10 yr. note: 1.16% -3 bp
5 yr. note: 0.65% -5 bp
2 Yr. note: 0.35% -3 bp
30 yr. bond: 1.80% -2 bp
Libor Rates: 1 mo. 0.085%; 3 mo. 0.134%; 6 mo. 0.151%; 1 yr. 0.241% (7/19/21)
30 yr. FNMA 2.0: @9:30 am 102.08 +27 bp (+30 bp from 9:30 am ET yesterday)
30 yr. FNMA 2.5: @9:30 am 104.05 +19 bp (+25 bp from 9:30 am ET yesterday)
30 yr. GNMA 2.5: @9:30 am 103.48 -14 bp (-7 bp from 9:30 am ET yesterday)
Dollar/Yuan: $6.4835 -$0.0070
Dollar/Yen: 109.56 +0.10 yen
Dollar/Euro: $1.1770 -$0.0030
Dollar Index: 93.12 +0.23
Gold: $1824.90 +$15.70
Bitcoin: 29,544 -1,144
Crude Oil: $66.04 -$0.38
DJIA: 34,453 +462
NASDAQ: 14,322 +47
S&P 500: 4297 +39
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.