September 20th, 2021 8:38 AM by Richard Sardella MLO.100007700/NMLS 233568
No market-moving news or data this morning until 10 am ET, but the 10 yr. note began at 1.35% +1 bp and MBS prices opened down 9 bps from yesterday at 8 am. Stock indexes began slightly lower.
The markets now awaiting next Wednesday’s FOMC policy statement and Powell’s press conference, what will the Fed announce on its tapering plans, that is the focus. On inflation expect the FOMC to continue to say inflation is just a blip and not a worry for the Fed yet. The reality though is that prices are continuing to increase across the board and the supply chain issues that are increasingly seen as not about to go away. The spreading of the Delta virus across Asia and Europe will keep most supplies on back order. Investors still following the Fed’s mandate that inflation isn’t going to accelerate and will dissipate soon. That looks like a long shot based on present outlooks.
The House is working on the $3.5 trillion social spending and tax increase bill. President Biden pushing hard on the moderate House members that are opposed to major spending increases, taking a more public role in the negotiations. The House has a 5 member Democrat majority and the Senate a 50/50 split. When the bill is sent to the Senate it will be Kamila Harris that breaks the tie. It isn’t just the $3.5 trillion spending bill, it also includes the $1 trillion infrastructure bill that has passed in the Senate and held hostage in the House, Pelosi won’t bring it up for a vote until the House passes the spending bill. The bills voted on in the House total about $4.5 trillion in spending and tax cuts, according to congressional aides familiar with cost estimates, far higher than the price tag in the Senate. Senate Democrats had previously settled on roughly $3.5 trillion as the target cost, down from about $6 trillion sought by progressives. If a spending bill is eventually passed in both the House and Senate the amounts will be less than what is being tossed around now.
At 9:30 am the DJIA opened -32, NASDAQ -29, S&P -7. 10 yr. 1.37% +3 bps. FNMA 2.0 coupon -17 bps from yesterday’s close and -24 bps from 9:30 am yesterday; the 2.5 FNMA coupon -11 bps from yesterday and -16 bps from 9:30 am yesterday.
The only data today, the mid-month U. of Michigan consumer sentiment index, expected at 72.0 from August’s 70.3; as reported sentiment reported at 71.
There is little reason now to expect interest rates will improve until the FOMC next Wednesday, the best we see between now and then is rates will continue in their tight ranges over the last three weeks. Worst case, the 10 moving up to 1.44%. This morning the 10 at 1.37% the high yield since August 11th, over a month ago.
PRICES @ 10:00 AM ET
10 yr. note: 1.37% +3 bp
5 yr. note: 0.87% +3 bp
2 Yr. note: 0.23% +1 bp
30 yr. bond: 1.91% +3 bp
Libor Rates: 1 mo. 0.087%; 3 mo. 0.122%; 6 mo. 0.149%; 1 yr. 0.224% (9/16/21)
30 yr. FNMA 2.0: @9:30 am 100.84 -17 bp (-24 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 103.50 -11 bp (-14 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 103.05 -8 bp (-12 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4615 +$0.0039
Dollar/Yen: 109.98 +0.24 yen
Dollar/Euro: $1.1752 -$0.0013
Dollar Index: 92.95 +0.02
Gold: $1751.10 -$5.60
Bitcoin: 47,365 -285
Crude Oil: $71.81 -$0.80
DJIA: 34,655 -96
NASDAQ: 15,099 -81
S&P 500: 4450 -23
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.