Rates slipping lower after weaker than expected durable goods orders

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Published Date 9/25/2020

August durable goods orders were released at 8:30 am ET: new orders +0.4% were lower than 1.5% estimates, excluding transportation orders +0.4% compared to 1.2% expected. July orders revised from +11.2% to 11.7%, ex-transportation to 3.2% from 2.4%. However, core capital goods (nondefense ex-aircraft) did better, expected at +1.7%, as released +1.8% and July revised to +2.5% from 1.9% originally released. Excluding defense, orders were up 0.7% in August. Meanwhile, orders for computers and electronic products, machinery, and transportation equipment all rose solidly in August, helping drive orders' overall gain. Orders for goods that will last three years, up for the fourth consecutive month. Surveys from data providers IHS Markit and the Institute for Supply Management showed factory activity grew in August, with gains in output and improvements in employment levels. A preliminary measure of manufacturing activity in September also accelerated, according to IHS Markit.

At 9:30 am ET, the DJIA opened -80, NASDAQ +22, S&P -6. 10 yr note at 9:30 am 0.66% -1 bp. FNMA 2.0 coupon at 9:30 am +8 bps from yesterday's close, and +11 bps from 9:30 am yesterday. FNMA 2.5 coupon at 9:30 am +13 bps from yesterday's close, and +11 bps from 9:30 am yesterday.

MBS markets are having a strong week; the spread between the rate for 30 yr mortgages and the 10 yr notes narrowed this week after widening for months.

There is nothing on the schedule for the rest of the session.

Mortgage rates are edging lower this week, narrowing the widespread that developed back in the spring while the 10 yr note has had little to no movement for months.

Source: TBWS

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