Market Wrap-up
MBS OVERVIEW
Our benchmark FNMA MBS 6.50 September Coupon is currently up +9 BPS.
Jobs, Jobs, Jobs: Its Big Jobs Friday! You can read the official BLS release here. The following is Bryan’s Tale of the Tape:
Jobs:
August Non Farm Payrolls (NFP) increased by 187K versus estimates of 170K.
July NFP were revised lower from 187K down to 157K.
June NFP were revised lower from 185K down to 105K.
The rolling three month average is now 150K.
Wages:
The national average hourly earnings rate increased by 8 cents and is now $33.82 per hour.
Average Hourly Earnings MOM increased by 0.2% versus estimates of 0.3%.
Average Hourly Earnings YOY increased by 4.3% versus estimates of 4.4%.
Unemployment:
The headline Unemployment Rate increased from 3.5% to 3.8%, the market expected it to remain at 3.5%.
The Labor Force Participation Rate moved up from 62.6% to 62.8%.
The U6 Underemployment Rate increased by 6.7% to 7.1%.
Average Weekly Hours increased from 34.3 hours to 34.4 hours.
Rosie the Riveter: The August ISM Manufacturing PMI edged out estimates, 47.6 versus estimates of 47.0. Prices Paid 48.4 versus estimates of 43.9, Employment Index 48.5 versus estimates of 44.2
Bob the Builder: July Construction Spending was higher than expected, 0.7% versus estimates of 0.5%.
On Deck for Tomorrow: ***The bond market is CLOSED on Monday***
More jobs than expected in August, the labor participation rate increased, average hourly earnings declined. A mixed picture when the report hit at 8:30 am ET, the initial reaction sent the 10 year note down 7 bps, after a second look rates turned higher through the remainder of the day. More jobs were the trigger, nonfarm payrolls rose by 187,000 after the prior two months were revised significantly lower. The unemployment rate climbed to 3.8%, the highest since early last year and largely reflecting a pickup in labor participation. The labor market has been the stalwart of the US economy this year, supporting renewed momentum that may help the nation avert recession — at least in the near term. The unemployment and pay figures likely add to the case for the Federal Reserve to hold interest rates at a 22-year high this month and potentially leave them there for a while. Although the 10 year note didn’t gain today may be more a technical issue when the note failed at 4.10%, the level we have noted as near term resistance. Saw noting that will cause the Fed to increase rates this month or possibly in November.
Next Week: Monday a holiday. Tuesday July factory orders. Wednesday MBA mortgage applications, July US trade deficit, August ISM services sector index, Fed Beige Book. Thursday weekly jobless claims, Q2 productivity and unit labor costs (another inflation read). Friday July consumer credit (get a look at credit card debt). Next week politicians will be back for more money by the end of Sept when Treasury will once again run out of money to pay bills.
This Week: The 10 year note yield declined 6 bps, the 2 year note declined 19 bps. FNMA 6.0 30 year coupon increased 59 bps. The DJIA this week +491, NASDAQ +441, S&P +110. Gold increased $25.00, crude oil increased $5.82. The dollar index increased 0.20 to 104.27. Bitcoin increased 335.
The increase in rates and lower MBS prices isn’t a turn to higher rates. With the Fed not likely to increase rates the rest of this year it is reasonable to expect longer term rates to decline. When the 10 breaks 4.10% the next target is 4.00% and that is possible next week.
10 year note at 4:00 PM
WE WERE LOCKED TODAY. TUESDAY LOOKS LIKE A BETTER DAY COMING.
PRICES @ 4:00 PM
10 year note: 4.18% +7 bp
5 year note: 4.31% +6 bp
2 year note: 4.88% +1 bp
30 year bond: 4.29% +8 bp
30 year FNMA 6.0: 100.13 -13 bp (-11 bp from 9:30)
30 year FNMA 5.5: 98.61 -13 bp (-30 bp from 9:30)
30 year GNMA 5.5: 98.89 -10 bp (-27 bp from 9:30)
Dollar/Yuan: $7.2614 +$0.0031
Dollar/Yen: 146.20 +0.65 yen
Dollar/Euro: $1.0773 -$0.0071
Dollar Index: 104.27 +0.65
Gold: $1967.10 +$1.10
Bitcoin: 25,631 -365
Crude Oil: $85.89 +$2.26
DJIA: 34,837.71 +115.80
NASDAQ: 14,031.81 -3.15
S&P 500: 4515.77 +8.11
SOFR Data 09/01: 30-DAY AVERAGE(%): 5.31135, 90-DAY AVERAGE(%): 5.18697, 180-DAY AVERAGE(%): 5.06045, INDEX: 1.09519589
Poland
| NAME | VALUE | NET CHANGE | % CHANGE | 1 MONTH | 1 YEAR | TIME (EDT) |
| WIG20:IND
|
2,050.94 | +23.56 | +1.16% | -6.30% | +40.23% | 11:15 AM |
| WIG:IND
|
69,017.63 | +586.17 | +0.86% | -4.30% | +42.37% | 11:15 AM |
| WIG30:IND
|
2,536.50 | +24.57 | +0.98% | -5.96% | +40.61% | 11:15 AM |
| CURRENCY | VALUE | CHANGE | NET CHANGE | TIME (EDT) | ||
| EUR-USD
|
1.0776 | -0.0067 | -0.62% | 4:31 PM | ||
| USD-JPY
|
146.1900 | 0.6500 | +0.45% | 4:31 PM | ||
| GBP-USD
|
1.2591 | -0.0082 | -0.65% | 4:31 PM | ||
| AUD-USD
|
0.6450 | -0.0034 | -0.52% | 4:31 PM | ||
| USD-CAD
|
1.3597 | 0.0089 | +0.66% | 4:31 PM | ||
| USD-CHF
|
0.8857 | 0.0023 | +0.26% | 4:31 PM | ||
| USD-MXN
|
17.0907 | 0.0529 | +0.31% | 4:25 PM | ||
| USD-CZK
|
22.3546 | 0.1585 | +0.71% | 4:29 PM |
| USD-SKK
|
27.9543 | 0.1715 | +0.62% | 4:29 PM |
| USD-PLN
|
4.1452 | 0.0197 | +0.48% | 4:29 PM |
| USD-HUF
|
356.4900 | 5.0100 | +1.43% | 4:29 PM |
| USD-RUB
|
96.3331 | 0.6300 | +0.66% | 11:43 AM |
| ELITE 21-30 YEAR | ELITE 16-20 YEAR | ||||||
| RATE | 15 DAY | 30 DAY | 45 DAY | RATE | 15 DAY | 30 DAY | 45 DAY |
| 8.625 | -4.620 | -4.570 | -4.440 | 8.500 | -5.018 | -4.968 | -4.838 |
| 8.500 | -4.408 | -4.358 | -4.228 | 8.375 | -4.705 | -4.655 | -4.525 |
| 8.375 | -4.083 | -4.033 | -3.903 | 8.250 | -4.478 | -4.428 | -4.298 |
| 8.250 | -3.840 | -3.790 | -3.660 | 8.125 | -4.352 | -4.302 | -4.172 |
| 8.125 | -3.787 | -3.737 | -3.607 | 8.000 | -4.081 | -4.031 | -3.901 |
| 8.000 | -3.540 | -3.490 | -3.360 | 7.875 | -3.741 | -3.691 | -3.561 |
| 7.875 | -3.194 | -3.144 | -3.014 | 7.750 | -3.464 | -3.414 | -3.284 |
| 7.750 | -2.888 | -2.838 | -2.708 | 7.625 | -3.284 | -3.234 | -3.104 |
| 7.625 | -2.853 | -2.803 | -2.673 | 7.500 | -3.056 | -3.006 | -2.876 |
| 7.500 | -2.683 | -2.633 | -2.503 | 7.375 | -2.687 | -2.637 | -2.507 |
| 7.375 | -2.274 | -2.224 | -2.094 | 7.250 | -2.417 | -2.367 | -2.237 |
| 7.250 | -1.938 | -1.888 | -1.758 | 7.125 | -2.196 | -2.146 | -2.016 |
| 7.125 | -1.872 | -1.822 | -1.692 | 6.999 | -1.991 | -1.941 | -1.811 |
| 6.999 | -1.692 | -1.642 | -1.512 | 6.875 | -1.587 | -1.537 | -1.407 |
| 6.875 | -1.226 | -1.176 | -1.046 | 6.750 | -1.360 | -1.310 | -1.180 |
| 6.750 | -0.877 | -0.827 | -0.697 | 6.625 | -1.185 | -1.135 | -1.005 |
| 6.625 | -0.735 | -0.685 | -0.555 | 6.500 | -0.918 | -0.868 | -0.738 |
| 6.500 | -0.507 | -0.457 | -0.327 | 6.375 | -0.468 | -0.418 | -0.288 |
| 6.375 | 0.019 | 0.069 | 0.199 | 6.250 | -0.143 | -0.093 | 0.037 |
| 6.250 | 0.538 | 0.588 | 0.718 | 6.125 | 0.383 | 0.433 | 0.563 |
| 6.125 | 0.635 | 0.685 | 0.815 | 5.999 | 0.740 | 0.790 | 0.920 |
| 5.999 | 1.014 | 1.064 | 1.194 | 5.875 | 1.184 | 1.234 | 1.364 |
| 5.875 | 1.659 | 1.709 | 1.839 | 5.750 | 1.698 | 1.748 | 1.878 |
| ELITE 11-15 YEAR | ELITE 8-10 YEAR | ||||||
| RATE | 15 DAY | 30 DAY | 45 DAY | RATE | 15 DAY | 30 DAY | 45 DAY |
| 7.000 | -2.353 | -2.303 | -2.173 | 7.000 | -2.220 | -2.170 | -2.040 |
| 6.875 | -2.086 | -2.036 | -1.906 | 6.875 | -1.964 | -1.914 | -1.784 |
| 6.750 | -1.707 | -1.657 | -1.527 | 6.750 | -1.588 | -1.538 | -1.408 |
| 6.625 | -1.443 | -1.393 | -1.263 | 6.625 | -1.324 | -1.274 | -1.144 |
| 6.500 | -1.367 | -1.317 | -1.187 | 6.500 | -1.234 | -1.184 | -1.054 |
| 6.375 | -1.314 | -1.264 | -1.134 | 6.375 | -1.182 | -1.132 | -1.002 |
| 6.250 | -0.989 | -0.939 | -0.809 | 6.250 | -0.870 | -0.820 | -0.690 |
| 6.125 | -0.666 | -0.616 | -0.486 | 6.125 | -0.547 | -0.497 | -0.367 |
| 6.000 | -0.465 | -0.415 | -0.285 | 6.000 | -0.329 | -0.279 | -0.149 |
| 5.875 | -0.333 | -0.283 | -0.153 | 5.875 | -0.201 | -0.151 | -0.021 |
| 5.750 | 0.095 | 0.145 | 0.275 | 5.750 | 0.214 | 0.264 | 0.394 |
| 5.625 | 0.520 | 0.570 | 0.700 | 5.625 | 0.618 | 0.668 | 0.798 |
| 5.500 | 0.638 | 0.688 | 0.818 | 5.500 | 0.733 | 0.783 | 0.913 |
| 5.375 | 0.966 | 1.016 | 1.146 | 5.375 | 1.027 | 1.077 | 1.207 |
| 5.250 | 1.430 | 1.480 | 1.610 | 5.250 | 1.487 | 1.537 | 1.667 |
| 5.125 | 1.860 | 1.910 | 2.040 | 5.125 | 1.896 | 1.946 | 2.076 |
| 5.000 | 2.114 | 2.164 | 2.294 | 5.000 | 2.136 | 2.186 | 2.316 |
| 4.875 | 2.528 | 2.578 | 2.708 | 4.875 | 2.533 | 2.583 | 2.713 |
| 4.750 | 3.024 | 3.074 | 3.204 | 4.750 | 3.024 | 3.074 | 3.204 |
| 4.625 | 3.517 | 3.567 | 3.697 | 4.625 | 3.497 | 3.547 | 3.677 |
| 4.500 | 3.624 | 3.674 | 3.804 | 4.500 | 3.617 | 3.667 | 3.797 |
| 4.375 | 4.049 | 4.099 | 4.229 | 4.375 | 3.992 | 4.042 | 4.172 |
| 4.250 | 4.703 | 4.753 | 4.883 | 4.250 | 4.640 | 4.690 | 4.820 |