September 9th, 2021 9:31 AM by Richard Sardella MLO.100007700/NMLS 233568
The only data today, weekly jobless claims, expected at 344K, declined to 310K. The lowest since late June as the labor market continues toward a full recovery. Claims are higher than pre-pandemic levels, and economists expect economic growth to slow in the third quarter as stimulus spending moderates. Claims rose by more than 7,200 in Louisiana, one of the states hit hardest by Hurricane Ida last week. Claims for pandemic unemployment assistance fell by more than 6,000 as the program is phased out. Last Friday the August employment report showed U.S. hiring fell abruptly in August with the smallest jobs gain in seven months. The initial reaction didn’t move the interest rate markets. The 10 down just 0.5% to 1.33%; MBS prices generally unchanged.
The ECB meeting concluded with what was widely expected; the Bank said it would slightly scale back its massive bond-buying program amid robust economic growth and inflation in the euro-zone, turning the corner on its stimulus despite a resurgence in Covid-19 cases globally and signs of slowdowns. Central banks including the Fed have been moving gradually toward phasing out emergency stimulus programs in recent weeks as inflation surges and growth recovers. But there is a fly in the ointment after the weak job growth reported in the August. The Fed was ready to begin tapering of its monthly buying of treasuries and MBSs, the markets expecting the beginning of cutting back as early as October, announcing it at the Sept 22nd FOMC meeting. Markets await Christine Lagarde’ s press conference. Analysts said the ECB would likely buy around €60 billion to €70 billion of Eurozone debt a month through the end of the year, down from around €80 billion a month at present.
On the Democrat $3.5 trillion healthcare, education and climate bill, there are numerous drafts being constructed trying to get a bill all Dems can support. Lawmakers are trying to pre-emptively sort through differences between House and Senate Democrats over many of its provisions, a task that has so far proven difficult. No matter when the bill is finalized it is very unlikely it will pass both the House and Senate as presently constructed, given the wide split between Dems and Republicans the bill may not go to a vote this year. Moderate Democrats are demanding that the full cost of the bill be covered with tax increases and new government savings, though many have also raised concerns about significantly increasing taxes. Meanwhile Pelosi has tied the bill to extending the debt limit now facing Treasury.
At 9:30 am ET the DJIA opened -36, NASDAQ +14, S&P -2. 10 yr. at 9:30 am 1.33% -1 bp. FNMA 2.0 30 yr. coupon +5 bps from yesterday and +9 bps from 9:30 am yesterday. The FNMA 2.5 30 yr. coupon at 9:30 am +6 bps and +8 bps from 9:30 am yesterday.
This afternoon Treasury will complete its $120B borrowing this week with $24B of 30 yr. bonds at 1 pm. Yesterday’s 10 yr. auction was met with very strong bidding and demand.
Nothing scheduled the remainder of the day, tomorrow August PPI. Inflation at the wholesale level; current consensus, m/m +0.6%, yr./yr. +8.3% from +7.8% in July. Ex food and energy m/m +0.5%, yr./yr. +6.6% from 6.2% in July.
So far this morning interest rate markets have been very quiet, no movement on the 10 yr. or MBSs since the openings this morning. Inflation still a question mark with traders, recent data confirms prices and wages are increasing, consumers are pulling back spending, the increase in Delta cases have slowed job growth; it’s a mixture that still confounds investors. The Fed though remains adamant that any inflation is going to be short-lived.
PRICES @ 10:00 AM ET
10 yr. note: 1.34% unch
5 yr. note: 0.81% unch
2 Yr. note: 0.22% unch
30 yr. bond: 1.96% unch
Libor Rates: 1 mo. 0.084%; 3 mo. 0.115%; 6 mo. 0.149%; 1 yr. 0.223% (9/8/21)
30 yr. FNMA 2.0: @9:30 101.34 +5 bp (+9 bp from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 103.88 +6 bp (+8 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 103.41 -2 bp (unch from 9:30 am yesterday)
Dollar/Yuan: $6.4536 -$0.0082
Dollar/Yen: 109.84 -0.42 yen
Dollar/Euro: $1.1817 unch
Dollar Index: 92.55 -0.11
Gold: $1796. 10 +$2.60
Bitcoin: 46,985 +830
Crude Oil: $68.85 -$0.45
DJIA: 35,093 +62
NASDAQ: 15,332 +45
S&P 500: 4523 +9
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.