Markets start better this week

Published Date 10/17/2022

Last Friday the 10 yr. note increased 8 bps, this morning it began down 8 bps, MBSs last Friday -34 bps, this morning +44 at 8:30 am ET. Last Friday stock indexes were under pressure with the DJIA -404, this morning at 8:30 am in futures trading +300. The 10 is finding technical resistance at the 4.0% area, Friday ending at 4.02%, at 8:30 am this morning 3.93% -9 bp.

This week’s calendar is thin on key data. Housing data with starts and permits, Sept existing home sales and NAHB housing market index; manufacturing data from the NE and the Fed’s Beige Book about all there is. So far this morning the NY Empire state manufacturing index was substantially weaker than estimates, -9.1 against forecasts of -2.5, on Thursday the October Philadelphia Fed manufacturing index is expected at -5.5, a little better than -9.9 in Sept but still showing a deep slowdown recently.

Last week the UK was in the headlines raising fears that its financial markets may be in trouble. This morning, after the UK finance minister was abruptly fired, the new minister Chief Jeremy Hunt said he is reversing nearly all the government’s proposed tax cuts and would pare back an energy price cap as he moves to reassure markets about the stability of the nation’s finances. One impact today, the dollar is weaker although there isn’t any reason to expect the dollar will lose its luster until central banks end their rate increases. The world will continue to move to the dollar. US stocks and bonds will lead the way out of the current wave of market turmoil.

At 9:30 am the DJIA opened +483 after dropping 404 on Friday, NASDAQ started +256 and -328 Friday, S&P +73 from -87 Friday. The 10 yr. note at 9:30 am -9 bps at 3.93%. FNMA 5.5 30 yr. coupon at 9:30 am +42 bps from Friday’s close and -1 bp from 9:30 am Friday morning.

Bloomberg has some interesting data this morning pointing to the recent selling in the S&P that implies we are not near the bottom of the current selling. The S&P 500 Index has fallen 25% in a little more than nine months since its January peak, a shallower and shorter drop than is typical of similar instances over the last century.

No scheduled data for the rest of the day. The 10 yr. and MBSs will march to the rhythm of stock indexes.

This Week’s Calendar:

  • Monday,
  • Tuesday,
  • Wednesday,
  • Thursday,

Source: TBWS

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