Published Date 10/5/2022
Stock indexes were trading lower early this morning after the DJIA rallied 1600 points the last two sessions. The 10 yr. note yield began up 6 bps after trading unchanged yesterday, MBS prices at 8:30 am ET -36 bps.
At 8:15 am ADP reported its Sept private jobs at 208K with forecasts at 200K, August jobs revised higher, from 132K to 185K. There was no initial reaction to the better jobs, the 10 was already up 6 bps and MBSs 36 bps lower.
The World Trade Organization said today with the surge in energy costs and rising interest rates weakening household demand, exports and imports should increase by just 1% in 2023, down from a previous forecast of 3.4%. The forecast weakening might be some help on inflation as supply chains will loosen, on the other hand the weakness could drive many global economies into prolonged recessions. The WTO also lowered its forecast for global economic growth in 2023 to 2.3% from 3.3%, and warned of an even sharper slowdown should central banks raise their key interest rates too sharply.
At 9:30 am the DJIA opened -294, NASDAQ -156, S&P -42. 10 yr. 3.72% +8 bp. FNMA 5.5 30 yr. coupon at 9:30 am -50 bps and -39 bps from 9:30 am yesterday.
At 10 am Sept ISM non-manufacturing index was expected at 56.0 from 56.9 in August, the index reported at 56.7.
OPEC+ to cut 2 mil barrels a day.
The recent decline in stock market improvement is driving more analysts and market pundits to increase their comments that the Fed should slow its rapid increase in rates. So far though we haven’t heard or seen any Fed official buckling. The criticism is building in markets, with more chatter that the Fed will finish its tightening by the end of the year and possibly begin to ease as early as next March. Unless the Fed (and markets) see inflation slowing the Fed won’t slow, even if it means a recession. The next FOMC meeting is Nov 3rd, between now and then there will be key inflation data released, CPI, PPI, PCE.
Source: TBWS
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