October 8th, 2020 10:35 AM by Richard Sardella MLO.100007700/NMLS 233568
At 8:30 am ET, the 10 yr. note down 3 bps from yesterday at 0.77%, stock indexes in futures trading improving with the DJIA +185. MBS prices started the day generally unchanged from yesterday.
Weekly jobless claims were expected at 819K, as released 840K(-9K); the prior week was revised from 837K to 849K, changing the prior week from -36K to -24K. The 4 week average at 857K from 870K. The report is considered totally inaccurate, with California still offline and not reporting. Continuing claims, the total number of Americans on state benefit rolls fell to 11 million in the week ended Sept. 26, a bigger-than-expected drop. The slight drop in new claims underscores the gradual improvement in the labor market, but with recent announcements from the airlines, Disney, and the entertainment sector, claims are likely to begin to increase. The number of Americans transitioning onto Pandemic Emergency Unemployment Compensation -- a federal program for people who have exhausted state benefits -- increased by 153,700 to 1.96 million in the week ended Sept. 19. There wasn't much of a reaction in the interest markets on the news, but stock index futures came off of their best levels.
The next Presidential debate is scheduled for Oct. 15, if it actually occurs. The Debate Commission announced the debate would be virtual; immediately President Trump said he would not participate if it is to be virtual. "No I'm not going to waste my time on a virtual debate," Trump said in a telephone interview with Fox Business this morning. "That's not what debating's about." Both campaigns said the commission acted unilaterally, without consulting them. President Trump is saying he will hold a rally instead.
At 9:30 am ET, the DJIA opened +92 after trading +185 earlier, NASDAQ +78, S&P +15. 10 yr. 0.76% -3 bps. FNMA 2.0 30 yr. coupon at 9:30 am -2 bps from yesterday's close and -3 bps from 9:30 yesterday. The 2.5 coupon was unchanged from yesterday, and +8 bps from 9:30 am yesterday.
At 1:00 pm ET, $23B 30 yr. bond auction.
More stimulus is very much needed, no one from Powell to Trump to Pelosi will disagree. President Trump shocked markets with his withdrawal from negotiations. Now he is working for a piecemeal deal rather than the catchall plan. "I think we have a really good chance of doing something," Trump said Thursday morning in a live interview with Maria Bartiromo on Fox Business. There are now "very productive talks" on coronavirus relief, he said. Pelosi and Treasury Secretary Steven Mnuchin held phone calls yesterday on potential aid for the airline industry, but the speaker wasn't willing to talk about other elements of what was to have been a comprehensive relief package. Pelosi rejected Trump's pressure to green-light a bill authorizing $1,200 individual stimulus checks, saying that it was insufficient to address the Covid-19 challenge. Continuing hopes for a stimulus deal have contributed to gains in stocks since they tanked on Tuesday.
On the 10 yr., we were looking for the 10 yr. to increase to 0.80%, yesterday it traded at 0.79% most of the session, this morning at 0.77%. With the 9-day relative strength index at overbought levels, we doubt the 10 yr. will exceed 0.80% in the near term (next few sessions); the overbought condition has to be alleviated.
PRICES @ 10:00 AM ET
10 yr. note: 0.774% -2 bp
5 yr. note: 0.33% -1 bp
2 Yr. note: 0.15% unch
30 yr. bond: 1.57% -2 bp
Libor Rates: 1 mo. 0.147%; 3 mo. 0.229%; 6 mo. 0.250%; 1 yr. 0.347% (10/7/20)
30 yr. FNMA 2.0: @9:30 103.30 -2 bp (-3 bp from 9:30 yesterday)
30 yr. FNMA 2.5: @9:30 104.81 unch (+8 bp from 9:30 yesterday)
30 yr. GNMA 2.5: @9:30 104.61 -11 bp (+6 bp from 9:30 yesterday)
Dollar/Yuan: $6.7902 -$0.0003
Dollar/Yen: 105.98 yen unch
Dollar/Euro: $1.1743 -$0.0024
Dollar Index: 93.73 +0.11
Gold: $1902.50 +$11.70
Crude Oil: $41.04 +$1.09
DJIA: 28,384 +81
NASDAQ: 11,408 +44
S&P 500: 3435 +16
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.