September 7th, 2021 8:57 AM by Richard Sardella MLO.100007700/NMLS 233568
Last Friday the August employment report reported much lower job growth. It is about weak jobs, the weakness in growth has momentarily moved traders to re-consider whether the Fed will execute the tapering of its debt that as had become generally expected.
The 10 yr note this morning at 1.37% the top of its near term range and the highest since 8/26; if the note breaches 1.37% this week the next technical target is 1.44%. MBS prices at 8:30 am ET this morning -16 bps frm last Friday.
There are no data points today and the key economic release won’t hit until Friday when the August PPI data is reported; the estimates are an increase in producer prices frm what was reported in July. This afternoon at 1 pm Treasury will begin this week’s $120B borrowing with $58B of 3 yr notes, tomorrow $38B of 10 yr notes and on Thursday $24B of 30s.
Goldman Sachs out with its revision of economic growth. The company revised its forecast from 6.0% to 5.7%, pointing to a “harder path” ahead for the American consumer than previously anticipated. For 2022, a forecast of improvement but we won’t take much frm it with so much uncertainty that is presently dominating financial markets now. The 2022 guess, an increase from 4.5% to 4.6%. American consumers are likely to spend less amid the Delta variant’s emergence, fading fiscal support and a switch from demand for goods to services; and the supply chain disruptions that show little improvement.
Expect to hear more talk about stagflation in the days to come. The mounting concern now is of a toxic mixture of weak demand and accelerating prices. Job growth so far has been disappointing, as of last week the extra unemployment payments expired.
At 9:30 am the DJIA opened -62, NASDAQ +17, S&P -5. 10 yr at 9:30 am 1.37% +3 bp. FNMA 2.0 30 yr coupon at 9:30 -11 bps frm Friday’s close and -7 bps frm 9:30 am Friday. The 2.5 coupon at 9:30 am -8 bps on the day and +2 bps frm 9:30 am Friday.
At 1:00 pm ET $58B 3 yr note auction.
The 10 is sitting on the next near term technical support at 1.37%, looking at the 9 day relative strength index the 10 is running into near term over-sold conditions.
PRICES @ 10 AM ET
10 yr note: 1.37% +5 bp
5 yr note: 0.82% +4 bp
2 Yr note: 0.22% +1 bp
30 yr bond: 1.99% +4 bp
Libor Rates: 1 mo 0.083%; 3 mo 0.114%; 6 mo 0.148%; 1 yr 0.219% (9/6/21)
30 yr FNMA 2.0: @9:30 101.23 -11 bp (-7 bp frm 9:30 am Friday)
30 yr FNMA 2.5: @9:30 103.77 -8 bp (+2 bp frm 9:30 am Friday)
30 yr GNMA 2.5: @9:30 103.34 -5 bp (+20 bp frm 9:30 am Friday)
Dollar/Yuan: $6.4646 +$0.0064
Dollar/Yen: 110.11 +0.27 yen
Dollar/Euro: $1.1854 -$0.0017
Dollar Index: 92.37 +0.34
Gold: $1816.10 -$17.60
Bitcoin: 50,839 -1091
Crude Oil: $68.70 -$0.59
DJIA: 35,1181 -188
NASDAQ: 15,365 +2
S&P 500: 4521 -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.