September 2nd, 2021 8:38 AM by Richard Sardella MLO.100007700/NMLS 233568
Locked in a very narrow range the last four sessions, the 10 yr. note has traded between 1.31% and 1.27%, 4 bps. This morning the 10 yr. started at 1.28% -2 bps from yesterday, at 8:30 am ET weekly jobless claims, expected at 350K, declined to 340K down 14K from the prior week. The less claims didn’t get much reaction although the 10 yr. inched up 1 bp to 1.29%. MBS prices at 9 am +3 bps. Weekly claims now the lowest since the beginning of the pandemic. Even so, claims remain elevated compared to pre-pandemic levels, and the fast-spreading delta variant has injected uncertainty into the economic outlook, posing a risk of future layoffs.
Q2 productivity didn’t meet estimates at +2.4%, as reported +2.1%. Unit labor costs were higher than the 1.0% expected to 1.3%. The two points add a little to the inflation debate.
US July trade deficit narrowed; consumers and businesses pulled back on purchases of imported goods amid rising Covid-19 cases caused by the Delta variant. The trade gap in goods and services shrank 4.3% from the previous month to a seasonally adjusted $70.1 billion. Imports fell 0.2% in July from June to $282.9 billion as demand slowed for consumer goods including toys, sporting goods and cellphones. Purchases of industrial supplies and material also declined. Exports expanded 1.3% to $212.8 billion. That was helped in part by a rebound in auto shipments. In June the deficit was a record high.
Lest we overlook it, the Treasury is about to run out of borrowing power with the debt ceiling already exceeded. There isn’t going to be a government shutdown or a Treasury debt default; what is likely is a short term extension of the debt limit according to House Budget Committee Chairman John Yarmuth. “I don’t think there’s any other option,”….. “A CR is inevitable.”
At 9:30 am the DJIA opened +130, NASDAQ +60, S&P +17. 10 yr. at 9:30 am 1.29% -1 bp. FNMA 2.0 30 yr. coupon at 9:30 am +2 bps from yesterday and -9 bps from 9:30 am yesterday; the 2.5 coupon unchanged and -11 bp from 9:30 am yesterday.
Tomorrow August employment data; the rest of the day should be quiet ahead of the report. That said mortgage lenders will likely price conservatively today, hedging the employment data.
Typically the Thursday before monthly employment data is quiet with investors and traders positioning for what is usually a volatile trade when the report hits at 8:30 am tomorrow. Technically, all of our short term indictors reflect the flat trading over the last four sessions are neutral, neither bullish or bearish. That won’t likely be the situation tomorrow at this time.
PRICES @ 10 AM
10 yr. note: 1.29% -1 bp
5 yr. note: 0.77% unch
2 Yr. note: 0.21% unch
30 yr. bond: 1.92%unch
Libor Rates: 1 mo. 0.083%; 3 mo. 0.118%; 6 mo. 0.152%; 1 yr. 0.227% (9/1/21)
30 yr. FNMA 2.0: @9:30 101.33 +2 bp (-9 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 103.80 unch (-11 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 103.19 -9 bp (-23 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4570 -$0.0030
Dollar/Yen: 109.97 -0.06 yen
Dollar/Euro: $1.1862 +$0.0020
Dollar Index: 92.39 -0.06
Gold: $1814.30 -$1.70
Bitcoin: 50,132 +1835
Crude Oil: $70.17 +$1.58
DJIA: 35,399 +86
NASDAQ: 15,352 +43
S&P 500: 4538 +14
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.