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Happy Thanksgiving from CHM. Daily Market Analysis November 23, 2022

November 23rd, 2022 9:15 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

10 yr. prior to 8:30 am ET +2 bp, stock indexes generally unchanged.

Today the key is the FOMC minutes due at 2 pm. Focus on how deep the idea is for cutting back rate increases. Given every Fed official has essentially “confirmed” the Fed will begin lessening rate increases at the Dec meeting, from 75 bps to 50 bps and next year another two 25 bp increases taking the FF rate to 5.0%, currently 3.75%-4.00%. Members are concerned that recent increases in rates need to take time to work into the economy and not go too far or stop too soon to achieve the goal of capping inflation.

At 8:30 am weekly jobless claims increased more than estimates to 240K against 225K, up 17 bps; the 4-week average 226.75K from 221.25K. The Fed continues to point to a tight employment market, but claims are inching up, still close to the lows when the pandemic began that were running at 200K.

Also, at 8:30 am October durable goods orders. New orders were thought to be +0.4% but jumped 1.0%, excluding transportation orders +0.5% with forecasts of 0.1%. Core capital goods also much stronger at +0.7% with expectations of +0.2%.

At 9:30 am the DJIA opened +8, NASDAQ +4, S&P -1. 10 yr. 3.75% -1 bp. FNMA 6.0 30 yr. coupon +2 bp and +5 bp from 9:30 am yesterday.

At 9:45 am the FLASH Nov PMI, the manufacturing index expected at 50.0, the service sector 48.0; as reported the composite index declined to 46.3, manufacturing 47.6 and services 46.1 The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The composite index declined to 46.3, manufacturing 47.6 and services 46.1; (under 50 is contraction); the unexpected weakness dropped the 10 yr. from 3.75% to 3.70%. The weak PMI will increase the idea the Fed will slow its increases.

At 10 am October new home sales and the U. of Michigan consumer sentiment index. New home sales were thought to be 575K, increased to 632K but Sept revised lower to 588K from 603K. The U. of Michigan consumer sentiment index expected at 55.0 from 54.7 increased to 56.8.

Now we wait for 2 pm when the FOMC minutes will hit. The general theme won’t change but details may cause reactions. After 2 pm and adjustments made from the minutes many will begin to leave for the long weekend, although stocks and bonds will trade on Friday (stocks close at 1 pm, bonds at 2 pm). Trading desks will be short staffed with second teams just in case, although there isn’t any reason to expect significant movements on Friday.

After all the data this morning the 10 yr. note declined to 3.70% -5 bp.

10 yr. prior to 8:30 am ET +2 bp, stock indexes generally unchanged.

Today the key is the FOMC minutes due at 2 pm. Focus on how deep the idea is for cutting back rate increases. Given every Fed official has essentially “confirmed” the Fed will begin lessening rate increases at the Dec meeting, from 75 bps to 50 bps and next year another two 25 bp increases taking the FF rate to 5.0%, currently 3.75%-4.00%. Members are concerned that recent increases in rates need to take time to work into the economy and not go too far or stop too soon to achieve the goal of capping inflation.

At 8:30 am weekly jobless claims increased more than estimates to 240K against 225K, up 17 bps; the 4-week average 226.75K from 221.25K. The Fed continues to point to a tight employment market, but claims are inching up, still close to the lows when the pandemic began that were running at 200K.

Also, at 8:30 am October durable goods orders. New orders were thought to be +0.4% but jumped 1.0%, excluding transportation orders +0.5% with forecasts of 0.1%. Core capital goods also much stronger at +0.7% with expectations of +0.2%.

At 9:30 am the DJIA opened +8, NASDAQ +4, S&P -1. 10 yr. 3.75% -1 bp. FNMA 6.0 30 yr. coupon +2 bp and +5 bp from 9:30 am yesterday.

At 9:45 am the FLASH Nov PMI, the manufacturing index expected at 50.0, the service sector 48.0; as reported the composite index declined to 46.3, manufacturing 47.6 and services 46.1 The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The composite index declined to 46.3, manufacturing 47.6 and services 46.1; (under 50 is contraction); the unexpected weakness dropped the 10 yr. from 3.75% to 3.70%. The weak PMI will increase the idea the Fed will slow its increases.

At 10 am October new home sales and the U. of Michigan consumer sentiment index. New home sales were thought to be 575K, increased to 632K but Sept revised lower to 588K from 603K. The U. of Michigan consumer sentiment index expected at 55.0 from 54.7 increased to 56.8.

Now we wait for 2 pm when the FOMC minutes will hit. The general theme won’t change but details may cause reactions. After 2 pm and adjustments made from the minutes many will begin to leave for the long weekend, although stocks and bonds will trade on Friday (stocks close at 1 pm, bonds at 2 pm). Trading desks will be short staffed with second teams just in case, although there isn’t any reason to expect significant movements on Friday.

After all the data this morning the 10 yr. note declined to 3.70% -5 bp.

PRICES @ 10:10 AM

10 yr note: 3.72% -4 bp

5 yr note: 3.91% -5 bp

2 Yr note: 4.48% -3 bp

30 yr bond: 3.78% -6 bp

Libor Rates: 1 mo 4.016%; 3 mo 4.689%; 6 mo 5.162%; 1 yr 5.579% (11/22/22)

30 yr FNMA 6.0: @9:30 am 101.61 +2 bp (+5 bp from 9:30 am yesterday)

30 yr FNMA 5.5: @9:30 am 100.61 +5 bp (+11 bp from 9:30 am yesterday)

30 yr GNMA 5.5: @9:30 am 100.50 +3 bp (+5 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1680 +$0.0277

Dollar/Yen: 140.68 -0.61 yen

Dollar/Euro: $1.0342 +$0.0037

Dollar Index: 106.80 -0.42

Gold: $1737.20 -$2.70

Bitcoin: 16,343 +297

Crude Oil: $78.13 -$2.82 (G7 price cap on Russian oil)

DJIA: 34,194 +97

NASDAQ: 11,257 +83

S&P 500: 4021 +18

About Richard Sardella

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on November 23rd, 2022 9:15 AM

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