Published Date 4/17/2019
Overnight the bond market was unchanged from yesterday; in US early trade the 10-yr note edged up a basis point to 2.60%. US stock indexes in pre-open trade were fractionally better.
We noted yesterday that China would likely report more positive data overnight. China’s economic growth held to a 6.4% rate in the first three months of the year as factory production picked up significantly amid signs authorities worked forcefully to stabilize business. It is the second quarter at 6.4% but still below 6.6% in 2018, that it has stabilized and is seen as a step forward for the world’s GDP growth. The Chinese economy once grew at over 15% yr/yr before the 2008 financial crisis. China has an overload on debt, and a lot of excess capacity as its growth has fallen 8.6% from its zenith. US/China trade talks are thought to be moving closer to an agreement but not much news this week. Markets and traders are increasingly optimistic about a trade pact. When it is complete, the House will likely toss grenades as it has with the NAFTA deal the administration worked out. Pelosi wants Mexico to increase and secure Mexican labor pay.
Weekly MBA mortgage applications declined 3.5% on the composite. Purchase applications were up by +1.0% while refinance apps dropped 8.0% following the prior week's 11.0% pullback. This index, as mortgage rates dropped, rose 39 and 12% in the last two months of March. Purchase apps increased to their highest level in almost nine years last week even as mortgage rates increased for a second week.
At 8:30 am ET February the US trade balance was better than forecasts at -$49.4B. The consensus was -$53.6B. Exports of goods rose 1.5% to $139.5B; Imports rose only 0.2% in the month, totaling $259.1B. Nice to see the decline in the balance. Today's results are certain to lift first-quarter GDP estimates which had been roughly at the 2%. And the easing deficit with China may well ease immediate tensions in U.S.-Chinese trade talks. The US trade gap is now at an 8-month low.
The economies in the EU continue to contract; Germany's Economy Ministry lowered its 2019 forecast for German GDP growth to 0.5% from 1.0%, in-line with speculation from last week. Germany is the largest and strongest economy in the EU based on any number of factors.
At 9:30 am ETthe DJIA opened up stood at 2.60%, +1 bp from yesterday.
Not a market-mover but at 10:00 am February wholesale inventories are expected to be up +0.3%.
There are two Fed officials speaking today, but neither will have anything that will influence markets; James Ballard and Patrick Harker (St. Louis and Philadelphia respectively) at 12:30 pm ET.
At 2:00 this afternoon the Fed Beige Book will be released, in which 12 Fed districts report on details. Not likely there will be anything in the Book that will have any major news that will change the view about the economy but does provide specifics around the country.
Near term techs continue to reflect negative very near term outlook. We expect the 10-yr note that drives MBS rates to continue to increase to 2.63% before there is support. The wider outlook for interest rates remains positive. With no worries about rising inflation, the Fed is more likely to lower the Federal Funds rate than increase it. Presently equity markets are pointing to making new highs, swinging money out of safe havens in sovereign debt (treasuries) and currently, the fear factors that drove rates lower are not much of an influence. The momentum oscillators are now at their most negative since back on March 1st. Trade this week is thin with the bond market closed tomorrow at 2:00 PM and closed Friday. The stock market is closed Friday.
Source: TBWS
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
Superior Funding Corporation is a Massachusetts Mortgage Company. Massachusetts Mortgage Lender and Broker License: MC2972, NMLS ID: 2972.
NMLS: 11481
Superior Funding Corporation
343 Washington Street, Newton MA
Company NMLS: 2972
Office: 617-938-3900
Email: rshulman@sfcorp.net
Web: http://sfcorp.net
NMLS: 11481
3/27/2024
Markets started the day fractionally better, the 10 year note at 8 am ET 4.22% -... view more
3/25/2024
While agents are still sorting out what all this means for their business, the m... view more
3/20/2024
FOMC meeting at 2 pm ET, Powell’s press conference at 2:30 pm. At the meeting, t... view more
3/18/2024
No doubt about it. The real estate industry just got hit with a massive life cha... view more
3/13/2024
Yesterday in reaction to the slightly higher inflation reported on the February ... view more
3/11/2024
Things are looking up for real estate lately. Those who report the numbers are t... view more
3/6/2024
Over night the 10 year note increased 2 bps to 4.17%, by 8:15 am ET the note dow... view more
3/4/2024
Ever heard that joke about how you can buy a 5-course steak dinner in Podunk for... view more
2/28/2024
Yesterday MBS prices were essentially unchanged, the 10 +2 bps, MBS prices -3 bp... view more
2/26/2024
The “r” word is still being bandied about despite the Federal Reserve having att... view more