Mortgage applications and home prices move higher

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Published Date 9/23/2020

Early on, the stock market continued to improve with the DJIA trading +205 at 8:45 am ET this morning in futures activity. Treasury rates began unchanged, same with the MBS markets.

Weekly MBA mortgage applications at 7:00 am ET jumped last week; the composite +6.8%; purchase apps +3.0% while re-financings after declining 4.0% the prior week, increased 9.0%.

The House agreed to a funding bill to keep the government from a shutdown that would have occurred at the end of this month. Not unexpected, but Trump did get some aid for farmers that Pelosi was against until now; shutting down the government was never in doubt, especially now with the election just a few weeks away. The stopgap measure, which next heads to the Republican-controlled Senate, will keep federal agencies fully up and running into December, giving lame-duck lawmakers time to digest the election and decide whether to pass the annual government funding bills by then or kick them to the next administration. The budget year ends Sept. 30. Pelosi restored a farm aid funding patch sought by the administration, which has sparked the ire of Democrats who said it plays political favorites as it gives out bailout money to farmers and ranchers. The 359-57 vote came after considerable behind-the-scenes battling over proposed add-ons. Pelosi won COVID-related food aid for the poor, including a higher food benefit for families whose children are unable to receive free or reduced lunches because schools are closed over the coronavirus.

At 9:00 am ET, this morning, one of the least interesting home price index (its old data); the FHFA reported the July house price index; expected +0.6%, as released +1.0%, yr/yr +6.5%, up from yr/yr n June at +5.8%.

At 9:30 am ET, the DJIA opened +135, NASDAQ -39, S&P +3. 10 yr at 9:30 am unchanged at 0.68%; traders awaiting surveys of purchasing managers that are expected to show that manufacturing and service activity kept expanding this month. FNMA 2.0 30 yr coupon at 9:30 am -2 bps from yesterday's close an -1 bp from 9:30 am yesterday. The FNMA 2.5 30 yr coupon at 9:30 am -2 bps from yesterday's close, and -1 bp from 9:30 am yesterday.

At 9:45 m ET, the Sept PMI Flash report; surveys of purchasing managers that are expected to show that manufacturing and service activity kept expanding this month. The composite index was expected at 54.5, as reported 54.4 that s essentially unchanged from August, the manufacturing index was forecast at 53.3, as reported +53.5, the service sector thought to be at 54.7 was 54.6. All three components fractional lower than in August, but this just the FLASH; we'll get the final later this month. No market reactions to the report.

Jerome Powell will be back at Congress today, testifying as a requirement of a quarterly report mandated by the Cares Act passed by Congress in March.

At 1:00 pm ET, Treasury will auction $53B of 5s; yesterday's 2 yr auction went so-so.

The bond and mortgage markets remain unchanged. No real change in rates now going back to mid-August.

Source: TBWS

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