Published Date 9/7/2022
This morning the 10 yr. -3 bps at 8 am ET after increasing 14 bps and MBS prices +8 bps. Stock indexes yesterday were lower, in futures trading this morning the indexes were lower but generally unchanged.
The weekly MBA mortgage applications last week were lower, as expected. The composite down 0.8%, purchase apps -0.7% and re-finances -1.1%. Mortgage applications have been lower for the last six weeks as interest rates increase, and consumers being priced out of the market.
The July US trade deficit, not a market mover, expected at -$70.5B was -$70.6B; June trade deficit was revised from -$79.6B to -$80.9B.
At 9:30 am the DJIA opened -42, NASDAQ +11, S&P -1. 10 yr. at 9:30 am 3.29% -5 bps. FNMA 5.0 30 yr. coupon at 9:30 am +11 bps from yesterday and -5 bps from 9:30 am yesterday.
Europe talking about rationing natural gas as winter looms. The region’s stocks have returned to losing ways since mid-August as market participants assess an escalation of the energy crisis and hawkish monetary policy. Traders are bracing for Thursday’s rate decision from the European Central Bank. The EU considering radical steps including price caps and a claw back on power and oil companies’ excess profits as it tries to stop its energy crisis from becoming an economic catastrophe. The EU will propose capping the prices paid to Russia for imported gas, Putin said earlier Russia won’t supply oil or gas to any nations that introduce price caps. In the meantime, the price of crude continues to decline, this morning down over a dollar in early trading.
Yesterday the August ISM services sector index increased implying the outlook isn’t so dire, but there is another index, S&P Global. According to that survey its index dropped to 43.7 the biggest fall since May 2020. The difference depends on who gets surveyed, the ISM index surveys primarily purchasing mangers while the Global index also surveys executives. Executives not as bullish as purchasing managers. No wonder there are constant differences in outlook that the Fed must consider, and no wonder the debate about the economy continues to roil markets and interest rates.
At 2 pm the Fed’s Beige Book will be released, usually not a lot new in it but does have more specifics within each of the 12 Fed districts.
The schedule has three Fed officials speaking today; tomorrow Jerome Powell will speak at the Cato Institute.
Source: TBWS
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