Daily Market Analysis
How Rates Move:
Are you looking for any big moves in the interest rate world? Keep looking. Yesterday the 10 yr. note 0.69% +2 bp, this morning 0.67% -2; FNMA 3.0 30 yr. coupon yesterday +3 bps, this morning +2 bps. Not news that there has been no change in the bellwether 10 yr. and mortgage rates for months now. Before the 9:30 am ET open, the stock indexes were trading lower in futures markets.
At 8:30 am ET, April personal income expected -6.0% increased 10.5%; personal spending -13.6% on estimates of -12.6%. The April PCE in line with forecasts at -0.5%, yr./yr. +0.5%; Core PCE -0.4%, yr./yr. +1.0%; the slowest pace since 1961 and far below the central bank’s 2% target. The core price index, which excludes more volatile food and energy costs, advanced 1%, the least since 2011. The PCE data as in line with the outlooks. No inflation in personal consumption expenditures. The increase in income compared to the forecasts is a welcome and surprising increase as federal economic-recovery payments were distributed under the CARES Act, the report said. It showed an annualized $3 trillion of government social benefits were provided in April, up from $70.2B the prior month. With the drop in spending, the personal savings rate jumped to a record 33% from 12.7%. Spending is slow and will likely take at least a year before spending levels get back to pre-virus levels.
At 9:30 am ET, the DJIA opened -138, NASDAQ +8, S&P -10. 10 yr. 0.68% -2 bps. FNMA 3.0 30 yr. coupon +2 bps from yesterday's close and +8 bps from 9:30 yesterday.
At 9:45 am ET, May Chicago Purchasing Manager's Index (PMI) was expected at 40 from 35.4 in April, as released the index came in at 32.3. 50 is the pivot, above 50 is seen as expansion, under is contraction.
At 10:00 am ET, the final May U. of Michigan Consumer Sentiment Index was estimated at 74 from 73.7; the index hit at 72.3 the lowest since Oct 2009.
At 11:00 Jerome Powell will speak.
President Trump said he'd hold a press conference Friday to discuss China,potentially stoking tensions between the world's two largest economies. Investors speculating the US will take action against China that could destabilize the global economy. The United States and Britain plan to informally raise at the United Nations Security Council on Friday China's plan to impose new national security legislation on Hong Kong. Hong Kong told the United States to keep out of the debate over national security legislation being imposed by China and warned that withdrawal of the financial hub's special status under US law could backfire on the US economy. Great Britain turned Hong Kong over to China in 1997 under a "one country, two systems" formula. From 2009 to 2018, the US trade surplus of $297B with Hong Kong was the biggest among all US trading partners. Chinese authorities and Hong Kong's government say any new legislation poses no threat to the city's autonomy and the interests of foreign investors would be preserved. Larry Kudlow warned that Hong Kong, which has enjoyed special privileges under US law based on its high degree of autonomy from Beijing, may now need to be treated like China on trade and other financial matters.
It's Friday and the last trading day in May. We're not expecting much movement in stock indexes or the interest rate markets.
PRICES @ 10:00 AM ET
10 yr. note: 0.68% -2 bp
5 yr. note: 0.32% -1 bp
2 Yr. note: 0.17% +1 bp
30 yr. bond: 1.45% unch
Libor Rates: 1 mo. 0.172%; 3 mo. 0.350%; 6 mo. 0.515%; 1 yr. 0.676% (5/28/20)
30 yr. FNMA 3.0: @9:30 105.11 +2 bp (+8 bp from 9:30 yesterday)
15 yr. FNMA 3.0: @9:30 105.34 -2 bp (+3 bp from 9:30 yesterday)
30 yr. GNMA 3.0: @9:30 105.47 -6 bp (-1 bp from 9:30 yesterday)
Dollar/Yuan: $7.1419 -$0.0043
Dollar/Yen: 107.54 -0.10 yen
Dollar/Euro: $1.1119 +$0.0041
Dollar Index: 98.23 -0.15
Gold: $1741.20 +$12.90
Crude Oil: $33.30 -$0.41
DJIA: 25,287 -113
NASDAQ: 9395 +27
S&P 500: 3023 -7
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
La Puerta Real Estate Services
About Vancellen Sturgeon
Vancellen Sturgeon began her mortgage career in the commercial lending field in 1981 and moved into residential lending in 1998. She has an exceptional background in mortgage lending and financial advising.
About This Report and Disclosure Information
All information furnished 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.
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