Another quiet day for markets with no domestic economic data

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Published Date 8/9/2024

Yesterday the 10 year note hit 4.00% and held, beside holding at a key psychological point the note also held at its 20-day moving average; this morning rates began lower, at 8:30 am ET the 10 at 3.94% -6 bp, early MBS prices +18 bps from yesterday.

There isn’t any scheduled news today. Yesterday weekly jobless claims were lower than forecasts pushing rates up, but MBS prices generally held well, the 5.5 FNMA coupon yesterday ended down 4 bps while the 10 year note increased 3 bps.

Last Friday’s very weak employment report set markets reeling, talk that the Fed should panic and lower the FF rate by 50 bps now and another 50 bps at the September FOMC (September 18th). The panic has ended and now positioning for next week’s inflation data will be the prime focus (PPI on Tuesday, CPI on Wednesday). The soft employment report increased comments that the US is close to recession, that too has ebbed as this week went forward. The last thing the Fed wants is a panic, it won’t move rates lower until the FOMC meeting and even then, it is up in the air whether 25 or 50 bps will occur.

As previously noted, the present volatility in US financial markets (stocks and bonds) will continue through next week, driven by inflation data and July retail sales. Focus will also be turning to the Jackson Hole symposium that brings global financial ministers, central bank officials and major banks together to talk. While not as critical as the FOMC meeting, markets tend to glean insight when talks occur. The annual meeting is August 22nd through the 24th.

Fed officials: Richmond Fed’s Barkin sees the U.S. economy and labor market in a state of normalization, not barreling into a recession. SF’s Mary Daly thinks a rate cut is necessary. KC Fed’s Schmid, no cut, the economy is doing well.

Stock indexes had a good day yesterday, the S&P increase (+120) was its best day since November 2022. This morning the indexes quiet.

At 9:30 am the DJIA opened -94, NASDAQ -9, S&P -2. 10 year 3.97%. 10 year 3.94% -6 bps. FNMA 5.5 30 year coupon +13 bps from yesterday’s close and +22 bp from 9:30 am yesterday.

On the mid-east tensions, Iran has not acted as it threatened earlier.

Source: TBWS

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