More trade uncertainty. It isn’t going to end anytime soon, and the longer it goes, the more likely a substantive outcome becomes less likely. Overnight US stock indexes were trading a little better, but (an here we go again) the indexes gave up their amid reports that Beijing is pessimistic about the chances of reaching a trade deal with the US improvement. China is balking on placing a dollar amount for purchases of US ag products and Trump non-committal about delaying additional tariffs due to hit a month. The longer it is left floating, the more dangerous the trade agreement becomes and more worried the US and global markets will become. Comments from Chinese officials currently on the impeachment and the thought of waiting until it is over and possibly holding off until next year’s election. Tomorrow may be a different thought in this stand-off that isn’t likely to be resolved for much longer than what was thought two weeks ago when Trump and Xi were planning to meet and sign the so-called phase one pact.
Interest rates this morning a little better, still, however, trapped in the narrow ranges the past few weeks.
Impeachment, according to comments today from China, has reached the trade talks.
Not news though, it has been in play on trade for weeks with Democrats holding secret hearings. President Trump is likely going to be impeached. The question is of course, is it going to matter when the election happens next year? This week, eight witnesses who will publicly testify over a marathon three-day period, some were on the July 25 Trump-Zelensky phone call, others had direct conversations with the president, half are current or former White House officials — and from their testimony. The Democrats expect to secure even more evidence, through first-hand accounts, connecting Trump to the campaign to pressure Ukraine to investigate his political foes. From here on it is mostly political theater.
At 9:30 am ET the DJIA opened +4, NASDAQ -13, S&P -3. 10 yr. at 9:30 1.81% -2 bps. MBS prices at 9:30 +11 bps from Friday’s close and +14 bps from 9:30 Friday.
At 10:00 am ET Nov NAHB housing market index was thought to be unchanged from October at 71, the index was 70.
This week US economic reports are thin; the three key data points that will get a good look, NAHB, October housing starts and permits and October existing home sales. The minutes from the recent FOMC meeting, always interesting, but with Jerome Powell testifying in Congress last week, the minutes are not likely to have anything new. Impeachment hearing leaks this week not likely to change the theater or outcome. Trade comments from China and the US will influence US financial markets.
The 10 yr. presently at 1.81%, a close below 1.80%, will project a technical move to 1.66%. Fundamentally that isn’t likely if trade talks become encouraging. Currently, the bond market (and mortgages) are influenced by trade, as is the equity market.
Technically the bond market is slowly improving but remain is narrow ranges.
Momentum is improving but doesn’t have any support other than China/US trade comments.
10:00 am Nov NAHB housing market index (expected unch at 71; as released
8:30 am Oct housing starts and permits (starts 1320K +4.80%); permits 1380K -0.5%)
7:00 am Weekly MBA mortgage apps
2:00 pm FOMC minutes from the Oct meeting
8:30 am Nov Philadelphia Fed business index (7.5 from 5.6)
- Weekly jobless claims (219K -6 K)
10:00 am Oct existing home sales (+2.15)
- Oct leading economic indicators (-0.1% same as Sept)
10:00 am U. of Michigan consumer sentiment index (95.7 unch from mid-month)
PRICES @ 10:10 AM
10 yr. note: 1.81% -2 bp
5 yr. note: 1.63% -3 bp
2 Yr. note: 1.59% -2 bp
30 yr. bond: 2.29% -2 bp
Libor Rates: 1 mo. 1.733% 3 mo. 1.,902%; 6 mo. 1.918%; 1
yr. 1.961% (11/15/19)
30 yr. FNMA 3.5: @9:30 102.70 +11 bp (+14 bp from 9:30 Friday)
15 yr. FNMA 3.0: @9:30 102.21 +4 bp (+14 bp from 9:30 Friday)
30 yr. GNMA 3.5: @9:30 103.89 +8 bp (+5 bp from 9:30 Friday)
Dollar/Yuan: $7.0259 +$0.0175
Dollar/Yen: 108.66 -0.11 yen
Dollar/Euro: $1.1070 +$0.0018
Dollar Index: 97.86 -0.13
Gold: $1471.90 +$3.40
Crude Oil: $57.07 -$0.65
DJIA: 28,012.70 +5.82
NASDAQ: 8521.45 -19.38
S&P 500: 3116.49 -3.97