Mortgage applications soar as coronavirus fears continue

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Published Date 7/8/2020

Treasuries and MBS prices started weaker this morning after strong gains in prices yesterday. FNMA 2.5 30 yr coupon at 8:30 am ET -6 bps from yesterday, the 10 yr at 0.66% +1 bp. The DJIA at 8:30 am up +25 points. The indexes set to open slightly higher in choppy trade as investors’ faith in an economic recovery wobbled on the back of the surge in coronavirus caseloads across the country.

Safe-haven gold caught a bid as the number of confirmed US cases surpassed 3 million, affecting nearly one of every 100 Americans. California, Hawaii, Idaho, Missouri, Montana, Oklahoma, and Texas shattered their previous daily record highs for new infections.

Yesterday gold broke above $1800, a key technical level. If gold continues to move higher (as it is today), that’s a sign that more and more people are beginning to hedge against risk, and it could start to weigh on equities.

Global stocks faltered today as an increase in new coronavirus cases in some parts of the world undermined prospects for a quick economic recovery. Frankfurt, Paris, and London all traded lower as investors shifted to wait-and-see mode, pondering the risk of more restrictive social distancing measures in some places. US stocks fell yesterday, halting a five-day winning streak by the benchmark S&P 500 index, its longest this year, driven by better-than-expected economic data.

Weekly MBA mortgage applications last week; the composite +2.3%, purchase apps +5.0%, and refinances +0.4%.

There isn’t any news today that will have a direct impact on markets so far.

At 9:30 am ET, the DJIA opened +45, NASDAQ +63, S&P +11. 10 yr at 9:30 am 0.66% +2 bps. FNMA 2.5 30 yr coupon at 9:30 am -6 bps from yesterday’s close and 8 bps better than 9:30 am yesterday.

Stocks swooned yesterday on worries of spreading infections, today rallying a little so far. No matter how infections increase or deaths grow, investors remain positive, with no place to go to continue to gain any returns. The June employment data is still fresh in the minds of investors.

Source: TBWS

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