October 6th, 2020 8:43 AM by Richard Sardella MLO.100007700/NMLS 233568
Early this morning the 10 yr. note yield unchanged at 0.79%, holding above the 0.75%.
No market-moving data points today. Powell and European Central Bank Chief Economist Philip Lane are set to deliver the keynote addresses at a meeting by the National Association for Business Economics today. After a few weeks of better numbers from the virus, there are increasing cases in the US and Europe. Powell, in past comments and speeches, has stressed that US economic recovery is dependent on containing the virus, here and abroad, recent counts in places in the US and globally are concerning. There are also lingering concerns about the trajectory of the pandemic and its effect on the economy. In Germany, new coronavirus cases jumped the most since mid-April, and Italy is set to tighten restrictions to curb the spread of the virus.
The IMF thinks differently about the economic outlook; it is forecasting better outlooks than in the past. Its 2020 global growth forecast next week will be slightly better while warning that the rebound from the recession will be long and bumpy. The fund is scheduled to release its updated forecast next week during the IMF and World Bank annual meetings.
The possibility of another stimulus package from Congress is still alive; Pelosi and Mnuchin are still talking. The two have been talking via phone for weeks trying to work out an agreement; they will continue today with a meeting face-to-face. Significant gaps remain between the Democrat's $2.2 trillion proposal and a $1.6 trillion offer backed by the White House. The clock is ticking on getting a deal before the election that is now less than a month away. There's some concern that even if Pelosi and Mnuchin were to find common ground for a deal, support for it is being threatened by some Republicans that oppose a deal that would support poorly run states.
Tomorrow Pence and Harris will debate. Normally a VP debate isn't much of a deal; this one, though, will carry more weight.
CoreLogic out this morning, saying home prices increased 5.9% in August.
At 9:30 am ET, the DJIA opened +16, NASDAQ -16, S&P unchanged. MBS prices were fractionally better after trading weaker early this morning, although the 10 yr. note is holding above 0.75% at 0.78% -1 bp. FNMA 2.0 30 year coupon at 9:30 am +8 bps from yesterday's close, and 13 bps lower than at 9:30 am yesterday.
The August US trade deficit widened to the largest since 2006 to $67.1 billion in August from a revised $63.4 billion in July, according to Commerce Department data released Tuesday. The median estimate survey of economists had called for a widening to $66.2 billion. The positive balance of services dropped to $16.8 billion. US recovery stronger than that in other nations; we import more than we export.
The August JOLTS job openings; 6.493 mil, better than forecasts of 6.250 mil but lower than 6.697 mil in July.
At 1:00 pm ET, Treasury will sell $52B of 3 yr. notes.
Technically the 10 yr. note is presently overbought; the 9-day relative strength index at levels that should keep the 10 yr. yield from increasing the next few days. Pushing on that noodle, fundamentals lean strongly toward keeping rates low, the Fed making that very clear. We'll go with the technicals; all of our work is bearish, although barely.
PRICES @ 10:00 AM ET
10 yr. note: 0.77% -2 bp
5 yr. note: 0.32% -1 bp
2 Yr. note: 0.14% unch
30 yr. bond: 1.58% -1 bp
Libor Rates: 1 mo. 0.142%; 3 mo. 0.220%; 6 mo. 0.233%; 1 yr. 0.348% (10/5/20)
30 yr. FNMA 2.0: @9:30 103.28+8 bp (-13 bp from 9:30 yesterday)
20 yr. FNMA 2.5: @9:30 104.72 +6 bp (-6 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.50 -11 bp (-8 bp from 9:30 yesterday)
Dollar/Yuan: $6.7905 unch
Dollar/Yen: 105.65 -0.10 yen
Dollar/Euro: $1.1793 +$0.0007
Dollar Index: 93.40 -0.11
Gold: $1924.30 +$4.20
Crude Oil: $40.69 +$1.47
DJIA: 28,225 +76
NASDAQ: 11,325 -7
S&P 500: 3408 -1
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.