By Jessica Shanahan, Premier Lending LLC adapted from the Shirmeyer Rate Market Report.
Yesterday the US stock market took a huge hit, this morning the selling continues in all global markets but in very early activity prior to the open at 9:30 the key US indexes were unchanged. Mortgage interest rates improved this past week largely driven by international news. Markets very concerned about this weekend’s vote in Crimea on a referendum to secede from the Ukraine and join Russia. Russian troops still on the border. China’s economic slowing is also roiling global markets; the combination of the two concerns sent interest rates lower yesterday on safety moves and hedging against possible continued selling of stocks. Yesterday the 10 yr note rate fell 9 basis points to 2.64% while MBS prices increased 36 bps but lagged the 10 yr note as most movement was in treasuries, MBSs improved mostly in sympathy with the 10 yr note.
The double barrel uncertainty (China and Russia) has stepped up market volatility this week and will likely continue next week into the FOMC meeting conclusion on Wednesday. Secretary of State Kerry told a Senate panel in Washington yesterday that the U.S. and Europe will take “very serious” steps the day after the Crimea vote “if there is no sign” of a resolution to the crisis.
The 10 yr note yield declined to 2.58% on February 3rd when the January employment report was released; this morning the 10 at 2.64%. From a pure technical perspective 2.58% will render strong resistance. From a fundamental perspective, if the situation with Russia leads to an economic slowing and China’s economy continues to show weakness the rate markets could decline a lot further. Looking to next week, the FOMC meeting on Tuesday and Wednesday with the Fed widely expected to taper another $10B taking the total tapering to -$30B from $85B a month.
PRICES @ 10:10 AM
10 yr note: -1/32 (3 bp) 2.65% unch
5 yr note: -2/32 (6 bp) 1.54% +2 bp
2 Yr note: unch 0.35% unch
30 yr bond: -2/32 (6 bp) 3.59% unch
Libor Rates: 1 mo 0.155%; 3 mo 0.233%; 6 mo 0.331%; 1 yr 0.557%
30 yr FNMA 4.0 Apr: @9:30 104.59 +6 bp (+57 bp frm 9:30 yesterday)
15 yr FNMA 3.0 Apr: @9:30 103.67 +7 bp (+48 bp frm 9:30 yesterday)
30 yr GNMA 4.0 Apr: @9:30 105.75 +3 bp (+51 bp frm 9:30 yesterday)
Dollar/Yen: 101.43 -0.41 yen
Dollar/Euro: $1.3911 +$0.0043
Gold: $1387.30 +$14.90
Crude Oil: $98.76 +$0.56
DJIA: 16,132.97 +24.08
NASDAQ: 4257.10 -3.32
S&P 500: 1849.38 +3.04
More next week, have a great weekend!
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