Perhaps markets will settle down as we start the weekend; US and global stocks, commodities and the dollar all had volatile weeks. The exception in all this volatility was the interest rate markets. Yesterday the stock market exploded for the DJIA’s biggest move since 2008. Oil this week fell as gold continued to decline. This morning once again the 10-yr opened unchanged at 2.86% but has edged lower to 2.85%. MBS prices early on their open +5 bps from yesterday’s unchanged prices.
Secretary of Treasury Mnuchin said he was preparing more tariffs on news that Turkey is sending its lira down again this morning. Turkey is moving closer to Russia and continues to refuse releasing the American pastor accused of being involved in the coup in 2016. As long as he is kept in Turkey, regardless of all other issues, President Trump will not let up; saying the United States “will pay nothing” for Brunson’s release, “but we are cutting back on Turkey!” He called Brunson “a great patriot hostage.”. Turkish officials say the case is a matter for the courts.
Also today there's news that Angela Merkel and Vladimir Putin are scheduled to meet tomorrow in Berlin to discuss Syria, Ukraine and the Nord Stream 2 pipeline that President Trump recently singled out for special hatred. The talks may help Putin end Russia's isolation and reaffirm Merkel's pivotal role in Europe.
President Trump asked the SEC to review ending quarterly reporting for U.S. businesses to ease regulations and spur growth. "In speaking with some of the world’s top business leaders I asked what it is that would make business (jobs) even better in the U.S. ‘Stop quarterly reporting & go to a six-month system,’ said one. That would allow greater flexibility & save money. I have asked the SEC to study!" Trump said in a Twitter post. One criticism is that if companies are striving to report profit gains every quarter, they are more likely to buy back shares and cut costs than invest in their businesses.
At 10:00 am mid-month the University of Michigan consumer sentiment index was expected to be unchanged from the final July read at 97.9; as released the index fell to 95.3, the lowest this year. Also at 10:00 am, July leading economic indicators were expected +0.4%, as released +0.6%. While it’s still mid-month, consumer sentiment is experiencing a surprising drop
No major news today is expected. Mortgage rates remain generally unchanged this week, last Friday the Fannie 4.0 30
yr. coupon ended the week at a price at 101.81, at 10:00 am its price 101.86. No movement, as is the case for the bellwether 10-yr note.
PRICES @ 10:10 AM
10 yr. note: +2/32 (6 bp) 2.86% unch
5 yr. note: +2/32 (6 bp) 2.73% -2 bp
2 Yr. note: +1/32 (3 bp) 2.60% -1 bp
30 yr. bond: +12/32 (37 bp) 3.01% -2 bp
Libor Rates: 1 mo. 2.077%; 3 mo. 2.322%; 6 mo. 2.513%; 1
30 yr. FNMA 4.0 Sept: @9:30 101.93 +3 bp (+3 bp from 9:30 yesterday)
15 yr. FNMA 4.0: @9:30 102.39 unch +1 bp from 9:30 yesterday)
30 yr. GNMA 4.0: @9:30 102.50 +3 bp (+2 bp from 9:30 yesterday)
Dollar/Yuan: $6.8777 -$0.0049 (China intervening to stop the slide)
Dollar/Yen: 110.47 -0.42 yen
Dollar/Euro: $1.1415 +$0.0037
Dollar Index: 96.31 -0.29
Gold: $1186.20 +$2.20
Crude Oil: $66.22 +$0.76
DJIA: 25,543.99 -14.74
NASDAQ: 7761.12 -45.41
S&P 500: 2835.79 -4.90