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Trinity Financial Services
Loan Officer
Julie DeMarcus
Loan Officer
Trinity Financial Services
NMLS#: 273328
Phone: 805-688-3124
Daily Market Analysis

Markets are jettison fixed income investments, particularly treasuries, but are still looking at junk bonds as a possible buy. Counter to the norms that treasuries are the safe place; defined as junk includes many corporate bonds are gaining attention based on the outlook that the economic growth will continue while treasuries push those corporate debt rates higher. Powell yesterday didn't follow the script many were expecting, that the Fed is concerned that inflation outlooks are increasing. The Fed, according to Powell, isn't concerned about inflation. Therefore, the Fed isn't ready to adjust its QE buying to support treasuries by more monthly buying of treasuries, switching to longer-term debt from short-term debt the Fed has preferred. The lack of immediate concern by the Fed that inflation is ticking higher isn't yet of concern. MBS prices tumbled 50 bps yesterday, and the 10 yr. note increased 8 bps to 1.56%.

According to what we read today in the WSJ, individual and institutional investors are also increasing purchases of what are known as leveraged loans, or corporate loans with junk credit ratings; and collateralized loan obligations, or CLOs, which buy up bundles of the loans and then repackage them into bonds. Unlike most debt, the interest that leveraged loans and CLO bonds pay investors rises when benchmark rates climb. Because it's a floating rate, you're de facto insulated from interest-rate risk, and the cherry on top is that a rising rate improves the return. The problem for investors is, there isn't enough of that debt around to satisfy the demand.

At 8:30 am ET, Feb employment data added more selling in MBSs and drove the 10 yr. note top 1.61% +5 bps. Feb jobs exploded compared to forecasts; NFP jobs expected +175K increased 379K, Jan NFP jobs revised from 49K to 166K. Private jobs were thought to be +183K jumped 465K, Jan private jobs revised from +6K to 90K. Manufacturing jobs in Feb were expected +16K, as released +21K. The unemployment rate also better at 6.2%, with forecasts of 6.3%. Average hourly earnings +0.2% as expected, yr./yr. 5.3%, which was also as expected.

At 9:30 am ET, the stock market opened better; the DJIA +300, NASDAQ +120, S&P +37. 10 yr. 1.60% +3 bps. FNMA 2.5 30 yr. coupon at 9:30 am ET -14 bps from yesterday's close and -72 bps from 9:30 am yesterday.

The stimulus bill in the Senate now; Dems want a quick approval to finish the package this week, have the House quickly approve the Senate's changes, and send it to Biden's desk before the March 14 expiration of pandemic unemployment benefits. Republicans have vowed to slow the process. Yesterday, after the bill was introduced and the Senate voted to proceed, Senator Ron Johnson, a Wisconsin Republican, demanded the Senate clerk read the entire 628-page text aloud, a formality that is usually waived off. That process took nearly 11 hours, wrapping up just after 2 am this morning.

The 10 yr. climbed briefly to 1.61% on the employment data, then has backed off. MBS prices declined 20 bps, also holding its low at 102.81 last week.

PRICES @ 10:00 AM ET

10 yr. note: 1.59% +3 bp

5 yr. note: 0.82% +3 bp

2 Yr. note: 0.15% +1 bp

30 yr. bond: 2.32% unch

Libor Rates: 1 mo. 0.103%; 3 mo. 0.175%; 6 mo. 0.203%; 1 yr. 0.283% (3/4/21)

30 yr. FNMA 2.0: @9:30 100.34 -8 bp (-74 bp from 9:30 yesterday)

30 yr. FNMA 2.5: @9:30 103.09 -14 bp (-72 bp from 9:30 yesterday)

30 yr. GNMA 2.5: @9:30 103.02 -16 bp (-64 bp from 9:30 yesterday)

Dollar/Yuan: $6.4958 +$0.0258

Dollar/Yen: 108.33 +0.36 yen

Dollar/Euro: $1.1925 -$0.0047

Dollar Index: 91.89 +0.26

Gold: $1694.50 -$6.20

Bitcoin: $48,391 +$467

Crude Oil: $65.94 +$2.17

DJIA: 30,949 +25

NASDAQ: 12,620 -103

S&P 500: 3762 -6

About Julie DeMarcus

In the real estate industry since 1985, Julie DeMarcus started her career with a local title company, worked her way to a Certified Escrow Officer and then switched gears in 1993 to mortgage lending. Julie helps her clients make sense of the often confusing world of lending. Working closely with her clients, Julie strives to produce a smooth, stress-free transaction. Thanks to her attention to detail and superb customer service, her client base has increased exponentially over the years. Her dedication to her clients continues to be a hallmark of her business. A local resident of the Santa Ynez Valley since 1991, Julie has been married to Andy since 1988 and has two grown children, Zach and Nicole.

About This Report And Disclosure Information

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Company Licenses: CA Bur of Real Estate-Real Estate Broker # 01308080 NMLS # 240525 Loan Officer Licenses: CA Bur of Real Estate-Real Estate Broker #01175903 NMLS #273328