The long weekend saw several relaxations of the shutdowns, beaches and more socializing in most states that had lifted some restrictions; there are a number of states that still enforce the lockdowns, those states didn't experience much improvement. The initial reaction this morning; stock indexes rallying strongly.
This week has a number of key data points; housing market, durable goods orders, personal income and spending, the Fed's Beige Book, and two consumer attitude indexes (see calendar).
It's risk on to begin the summer months; stocks higher, interest rates higher, the dollar weaker, crude oil higher and gold down.
Congress off this week; when it gets back, the next stimulus package will re-start. Dems want $3.3T for more assistance to small businesses and an increase in checks to people suffering from unemployment. Republicans want to wait to get a better picture of how the previous stimuli are working and how the impact of opening the economy and easing the shutdowns. More than 130 mil stimulus checks are already winding their way to millions of Americans. The debate is about increasing checks to $1,200 to bridge the gap between actual expenses and government assistance. The current $600/month help is scheduled to expire in July. Approximately 2.4 million unemployed Americans applied for unemployment benefits last week using the traditional method of reporting initial claims, but the real number was almost 1 million higher if applicants made eligible through a new federal relief program are included. Some 35.5 million people have applied for jobless benefits through their states. In 8 of the top 10 cities, the economic impact payment only covers between 60% and 71% of the estimated monthly budget for a family of four. The stimulus payment will cover 50% or more of one month's estimated expenses in just 34 of the top 98 metro areas.
At 9:00 am ET, March CoreLogic home price index was expected +0.3%, as reported +0.5%; March FHFA home price index expected +0.6%, as reported +0.1%.
At 9:30 am ET, the DJIA opened +600, NASDAQ +154, S&P +62. 10
yr. 0.70% +4 bps. FNMA 3.0 30 yr. coupon -2 bps from Friday’s close.
At 10:00 am ET, two key data points; May Conference Board consumer confidence index, expected at 88.3, as released 86.6. April's new home sales were expected at 495K increased to 623K.
At 1:00 pm ET this afternoon, Treasury will begin this week's auctions with $44B of 2s. The total of 2s, 5s, and 7s this week $127B.
For two months now, the bellwether 10 yr. note yield hasn't moved in any appreciable way. No one is betting on lower rates in the treasury markets; the Fed says no to negative rates, and even with the recent strong rebound inequities, the 10
yr. is marking time. Treasury traders at the long end of the curve are looking to higher rates as the economy rebounds. The supply chains are broken, when consumers begin to spend, prices are likely to increase and ignite a little inflation and not to forget, the US debt is exploding and add to the cautious outlook for interest rates.
PRICES @ 10:10 AM ET
10 yr. note: 0.70% +4 bp
5 yr. note: 0.35% +1 bp
2 Yr. note: 0.19% +2 bp
30 yr. bond: 1.43% +5 bp
Libor Rates: 1 mo. 0.173%; 3 mo. 0.369%; 6 mo. 0.570%; 1
yr. 0.681% (5/22/20)
30 yr. FNMA 3.0: @9:30 104.98 -2 bp
15 yr. FNMA 3.0: @9:30 105.32 unch
30 yr. GNMA 3.0: @9:30 105.86 +30 bp
Dollar/Yuan: $7.1306 -$0.0062
Dollar/Yen: 107.62 -0.08 yen
Dollar/Euro: $1.0975 +$0.0076
Dollar Index: 99.05 -0.82
Gold: $1718.30 -$17.20
Crude Oil: $34.47 +$1.23
DJIA: 25,039 +574
NASDAQ: 9454 +130
S&P 500: 3009 +54