September 30th, 2021 8:56 AM by Richard Sardella MLO.100007700/NMLS 233568
Interest rates opened generally unchanged this morning; stock indexes traded a little better.
At 8:30 am ET weekly jobless claims expected at 330K increased to 362K +11K from the prior week. The third week in a row claims have increased. California saw an increase of nearly 18,000 claims, the biggest in the week, after a more than 17,000 surge in the previous period. Michigan and Texas also showed notable gains. In old news, the final Q2 GDP at 6.7% was what was expected, Q2 PCE on an annual basis +12.0%.
The last day in fiscal 2021 today. The Senate is expected to vote this morning to extend government funding until Dec. 3, sending the package to the House and ultimately to Biden’s desk for signature with just hours to spare. Pelosi affirmed her plan to bring the $550 billion infrastructure bill to the House floor on Thursday. Her party progressives though are not budging. House progressives have threatened to vote against the public works measure if it comes to the House floor before the larger package, which includes much of their priorities, passes both chambers. The progressives have said they have enough votes in the House to sink the infrastructure package.
Two issues we believe; in the end there will be no government shutdown and Treasury won’t default on its debt payments. Secondly, the $3.5trillion bill will never be passed as it is presently structured. Looks more and more likely that an agreeable compromise is out of the question and could well drag on until next year. Progressives dug in hard, moderates trying to walk the tight rope working on an acceptable plan. On the debt, Janet Yellen yesterday saying that Treasury has until October 18th before it will default on US debt; it will get done and no default will happen, a death knell for Dems if that would occur.
At 9:30 am the DJIA opened +148, NASDAQ +80, S&P +18. 10 yr. 1.54% +1 bp. FNMA 2.5 30 yr. coupon at 9:30 am -9 bps and -10 bps from 9:30 am yesterday.
At 9:45 am Sept Chicago purchasing mgrs. index, expected at 65.3 from 66.8 in August, as reported the index fell to 64.7.
Jerome Powell and Janet Yellen about to testify to the House Financial Services Committee.
Another hurdle for the idea inflation isn’t likely to ebb; China is facing an energy problem. China’s power curbs just added another unwanted twist to already worsening global supply chains. Higher costs and prices are already showing up for energy-intensive goods.
The 10 testing 1.55% over the last two days. It is what now some analysts insist is just a correction in the recent decline in rates, not the fear of inflationary pressures. We don’t agree; inflation is increasing and even the Fed isn’t sure now how long or how much inflation will happen over the next year. Japan just reported it’s inflation +4.0%. At these low interest rates the belief rates can work lower is wishful thinking driven by equity market investors. For those that espouse this increase in rates doesn’t have a lot to do with inflation it is a hard issue to square.
PRICES @ 10:00 AM ET
10 yr. note: 1.54% +1 bp
5 yr. note: 1.01% +1 bp
2 Yr. note: 0.29% +1 bp
30 yr. bond: 2.09% +2 bp
Libor Rates: 1 mo. 0.082%; 3 mo. 0.131%; 6 mo. 0.157%; 1 yr. 0.241% (9/29/21)
30 yr. FNMA 3.0: @9:30 am 104.55 +5 bp (+5 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 102.92 -9 bp (-10 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 102.75 -5 bp (-8 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4533 -$0.0174
Dollar/Yen: 111.77 -0.20 yen
Dollar/Euro: $1.1589 -$0.0008
Dollar Index: 94.29 -0.05
Gold: $1783.50 +$15.60
Bitcoin: 43,176 +1,928
Crude Oil: $73.38 -$1.45
DJIA: 34,409 +19
NASDAQ: 14,602 +89
S&P 500: 4374 +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.