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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   100-01 (+04)  
  FN 2.5% Coupon   104-21.5 (+01.5)  
  Support   0.787%  
  Resistance   0.614%  
  Wednesday, November 25, 2020

Treasury Yields Fall as Economic Data Underwhelms

Market opened today's session with treasuries higher across all maturities. 10-Year Treasury yield is at 0.8602, 1.97 bps decreased from prior closing of 0.8799.
US stocks opened lower this morning, a day after the S&P 500 recorded an all-time high. Notable laggards include Gap Inc. following disappointing Q3 earnings. In Europe, ABN Amro Bank NV and Commerzbank AG lowered by over 3% as the European Central Bank indicated banks will have to set money aside for when government pandemic support ends and the economy grapples with a significantly increased debt burden. Elsewhere, Bitcoin surpassed $19,000, meanwhile, WTI Crude rose to $45.25 a barrel and Gold increased by 0.3%. On the economic front, MBA mortgage applications increased by 3.90% for week end November 20. Notably, purchases and refi's were up by 3.50% and 4.50%, respectively, with refi's accounting for 71.1% of loans. The average 30 year rate stood at 2.92%. Initial Jobless Claims for week end Nov 21 rose once more to 778,000 claims. While ongoing state unemployment fell by 299,000, the number of Americans continuing to claim extended assistance continued to increase, showcasing individuals have exhausted state benefits, even as coronavirus cases continue on the rise and states move back into lockdown, creating more job layoffs in the process. The month of October saw a decline in Personal Income, having fallen by 0.70% after rising by 0.90% a month prior. Even as incomes decreased, Personal Spending over the same period of time rose by 0.5%, still a fraction of the 1.4% increase reported in the month prior. With congress still deadlocked on further stimulus and infections on the rise, savings and a recovering job market helped account for the increase in spending, however this will face headwinds given a surge in cases could deter purchases, in addition to which, renewed business restrictions could only further job losses. New Home Sales for the month of October beat expectations and increased to 999K. A by-product of record-low mortgage rates, home sales continue to remain well above pre-pandemic levels. In addition to this, Wholesale Inventories MoM advanced by 0.90%, with imports and exports rising by 2.20% and 2.80%, respectively. US GDP Annualized QoQ remained in line with expectations, reporting at 33.10% for Q3. Reporting later today are the latest FOMC meeting minutes, with major takeaways pointing towards further color into the Fed's balance sheet.
The curve has bull-flattened with UST 10-Year yield down 1.97 bps.
This Week's Events
  11/23 Chicago Fed Nat Activity Index 05:30 Oct 0.27 0.83 0.27 0.32  
  11/23 Markit US Services PMI 06:45 Nov P 55.00 57.70 56.90 -  
  11/23 Markit US Composite PMI 06:45 Nov P - 57.90 56.30 -  
  11/24 S&P CoreLogic CS 20-City MoM SA 06:00 Sep 0.70% 1.27% 0.47% 1.35%  
  11/24 S&P CoreLogic CS 20-City YoY NSA 06:00 Sep 5.30% 6.57% 5.18% 5.33%  
  11/24 Conf. Board Consumer Confidence 07:00 Nov 98.00 96.10 100.90 101.40  
  11/25 MBA Mortgage Applications  04:00 20 Nov - 3.90% -0.30%  -  
  11/25 Initial Jobless Claims 05:30 21 Nov 730k 778k 742k 748k  
  11/25 Continuing Claims 05:30 14 Nov 6000k 6071k 6372k 6370k  
  11/25 PCE Deflator MoM 05:30 Oct 0.00% 0.00% 0.20% -  
  11/25 PCE Deflator YoY 05:30 Oct 1.20% 1.20% 1.40% -  
  11/25 Durable Goods Orders 05:30 Oct P 0.80% 1.30% 1.90% 2.10%  
  11/25 GDP Annualized QoQ 05:30 3Q S 33.10% 33.10% 33.10% -  
  11/25 GDP Price Index 05:30 3Q S 3.60% 3.60% 3.60% -  
  11/25 Bloomberg Consumer Comfort 06:45 21 Nov - 49.60 49.80 -  
  11/25 U. of Mich. Sentiment 07:00 Nov F 77.00 76.90 77.00 -  
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  This information is provided solely for informational use and is not intended as an advice for trading or investment purposes in any manner whatsoever. Sun West Mortgage Company, Inc. is not a licensed or registered broker or dealer and cannot provide investment strategies or recommendations. This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.  
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