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Interest markets were closed yesterday but equity markets traded; the DJIA lost 250 points. Early this morning the 10
yr. note yield 1.60% -1 bp.
The National Federation of Independent Business reported its Sept optimism index, 99.1
from 100.1 in August.
At 10 am ET Sept JOLTS job openings were expected at 11.013 mi
from 10.934 mil in August; as reported 10.439 mil; August revised to 11.098 mil.
At 11:30 am Treasury will auction $58B of 3 yr. notes. At 1 pm $58B of 10
yr. notes.
The House is expected to vote today to do what has to be done; avoid a Treasury default; raising the U.S. borrowing limit into December, temporarily staving off a default while lawmakers battle over setting a new ceiling for U.S. debt. Pelosi calling members back after a week off; a warning from Treasury Secretary Janet Yellen to House Democratic leaders that if the chamber failed to act this week, the U.S. would be unable to pay its bills. The White House has said that President Biden will sign the measure into law. The increase, $480B, just enough to keep Treasury
from defaulting until Dec 3rd when it all starts over. “We must lift the debt ceiling and hope that we can have a unanimous Democratic vote and perhaps a bipartisan vote to do so,” Mrs. Pelosi said yesterday. The debt-limit increase doesn’t authorize new spending, but instead allows the government to meet existing obligations, including interest on the debt and payments to Social Security, Medicare and Medicaid.
Congress still not able to come to an agreement about the $3.5 trillion social spending bill;
what is clear though that if a deal is reached it won’t be near that amount. Even key Democrats are now admitting the package will have to be pared down to $2 trillion give or take; even that is going to be a tough sell.
Inflation fears are multiplying, energy prices increasing daily, export and import prices continue to increase and the supply chain problems are no closer to being fixed than it was six weeks ago; although we continue to hear the same optimistic outlook that we have for months, that it will end soon.
This week’s key data, Sept CPI and PPI. Reading that stagflation is back as an increasing concern. Prices increasing while the economy may slow. “Energy prices head toward multiyear highs and persistent shortages crimp supply chains worldwide. That’s fueling price pressures and pushing up bond yields just as economic growth is cooling and central banks such as the Federal Reserve weigh scaling down pandemic-era stimulus. And after a second straight month of disappointing U.S. jobs gains, the stakes are rising heading into this week’s inflation report” (Bloomberg)
At 9:30 am the DJIA opened +27, NASDAQ +47, S&P +7. 10 yr. 1.61% unch. FNMA 2.5 30
yr. coupon -3 bps from Friday and -30 bps from 9:30 am Friday.
At 1 pm this afternoon Treasury will auction $38B of 10s, re-opening the issue from August.
Technically, the 10 yr. note is presently in very oversold levels in the very near term; the wider outlook on our work is for the 10
yr. note to continue to increase to 1.74%. Fundamentally there is little reason to expect interest rates will decline.
This Week’s Calendar:
- Tuesday,
6:00 am Sept NFIB small business optimism index (99.1 frm 100.1 in August)
10:00 am August JOLTS job openings (expected 11.013 mil frm 10.934 mil; as reported
11:30 am $58B 3 yr note auction
1:00 pm $38B 10 yr note auction ( 9 yr, 10 mo)
- Wednesday,
7:00 am MBA weekly mortgage applications
8:30 am Sept CPI ( +0.3%,yr/yr +5.3%; ex food and energy +0.2%, yr/yr +4.0%)
1:00 pm $24B 30 yr bond auction (29yr 10 mos.)
2:00 pm FOMC minutes
Sept Treasury budget statement (-$130.1B)
- Thursday,
8:30 am weekly jobless claims (320K frm 326 last week)
Sept PPI (+0.5%, yr/yr +8.7%; ex food and energy +0.5%, yr/yr +7.1%)
- Friday,
8:30 am Sept retail sales (-0.1%, ex autos +0.4%, ex autos and gas +0.7%)
Sept import and export prices (imports +0.6%,yr/yr +9.4%; exports +0.5%, yr/yr +16.8%)
10:00 am U. Of Michigan consumer sentiment index mid-month 74.0 frm 72.8 in Sept)
PRICES @ 10 AM ET
10 yr note: 1.60% -1 bp
5 yr note: 1.07% +2 bp
2 Yr note: 0.34% +3 bp
30 yr bond: 2.13% -4 bp
Libor Rates: 1 mo 0.085%; 3 mo 0.121%; 6 mo 0.156%; 1 yr 0.256% (10/11/21)
30 yr FNMA 3.0: @9:30 am 104.39 +6 bp (+1 bp frm 9:30 am Friday)
30 yr FNMA 2.5: @9:30 am 102.56 -3 bp (-30 bp frm 9:30 am Friday)
30 yr GNMA 2.5: @9:30 am 102.22 -28 bp (-51 bp frm 9:30 am Friday)
Dollar/Yuan: $6.4489 -$0.0017
Dollar/Yen: 113.61 +0.28 yen
Dollar/Euro: $1.1548 -$0.0006
Dollar Index: 94.46 +0.14
Gold: $1759.80 +$4.10
Bitcoin: 57,161 -228
Crude Oil: $80.82 +$0.29
DJIA: 34,524 +28
NASDAQ: 14,499 +6
S&P 500: 4361 unch
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