skip to Main Content

Rate markets seek calm ahead of market-moving economic events this week

Yesterday, the 10 yr yield fell to its lowest rate since the middle of April. This morning, the note started unchanged from yesterday. Overnight, no news of substance for financial markets, and there are no economic reports to think about.

Weekly MBA mortgage applications fell last week; the composite -4.2%, purchase apps -4.0%, and refinances tumbled 7.0%.

The heads of the six largest U.S. banks are set to testify before Congress. They likely will face pressures from Democrats seeking action on racial disparities in lending and Republicans who say banks should avoid taking positions on social issues.

Republicans are offering a new infrastructure bill, raising the amount from $568B previously proposed to $1T and coming close to what the Biden folks have been proposing. President Biden told the GOP lawmakers during a private meeting earlier this month that he would support a $1 trillion plan over eight years. One of the issues in the coming negotiations is how to define infrastructure. Republicans are pushing to define infrastructure using the standard definition (roads, bridges, etc.). Biden’s plan includes $400B in care for elderly and disabled Americans that Republicans have argued shouldn’t be considered infrastructure. The White House has also proposed a separate $1.8T package for paid leave, education, and child care. “I thought that we’ve all agreed that we’re going to separate and have just the traditional infrastructure and then we’ll have the human infrastructure,” Democrat Senator Manchin said.

At 9:30 am ET, the DJIA opened +78, NASDAQ +44, S&P +8. 10 yr 1.56% unchanged. FNMA 2.5 30 yr coupon ay 9:30 am -5 bps, +5 bps from 9:30 am yesterday. NOTE: by 10:00 am MBS prices +2 bp on the session and +12 bps from 9:30 am.

At 1:00 pm ET, Treasury will auction $61B of 5 yr notes; yesterday, the 2 yr note was well bid.

If interest rates are going to move lower from the current resistance, it will take some fresh news, and on Friday, April personal income and expenditures may provide it. The odds that the 10 yr yield will decline today are not high. We need more news that inflation isn’t going to increase, and that is a high hurdle with the 10 yr down 13 bps the past two weeks.

Back To Top
Translate »