November 2nd, 2017
Suggestions that can change during the day: Mortgage Bond prices are modestly higher ahead of tomorrow's closely watched jobs report. Short-term locking is recommended.
After close Commentary: Not much movement in MBS today ahead of tomorrow's Jobs Report for October where it is expected that 300K new positions were created. The benchmark Fannie Mae 30-yr 3.5% coupon closed at 102.84, +6bp, above resistance at the 200-day Moving Average. Stocks ended mixed. The Dow ended with an 81.25 gain closing at a record high of 23,516.26, the S&P closed near unchanged at 2,579.85, while the NASDAQ ended with a small loss of 1.59 points ending at 6,714.94. WTI oil settled at $54.54/barrel, +$0.24. 10-yr yield slipped to 2.34%. President Trump nominated Fed Governor Jerome Powell for the next Fed Chair. The widely anticipated Jobs Report for October will be released at 8:30 a.m. ET tomorrow and always carries big headline risk. Be sure to be tuned in around 8:30 for the numbers and the market reaction.
Late morning Commentary: The Republicans introduced their tax bill to the House of Representatives this morning seeking up to $6 trillion in tax cuts over the next 10-years. Some of the details have been released. The corporate tax rate will go from 35% to 20% and will be permanent. The tax plan would maintain state and local deductions for mortgage interest for existing loans and newly purchased homes will be capped at $500K versus the current $1 million. The child tax credit will go to $1,600 from $1,000.
The Fed released its monetary policy statement yesterday without much fanfare. The Fed left the benchmark Fed Funds Rate unchanged at 1.25% and left the door open for a December hike. The Fed said the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions. The Fed went on to say that inflation measures have declined this year and continue to run below 2%. The Fed will most likely hike at the December meeting. Fed Funds Futures show a near 100% chance of a hike next month.
Online shopping is expected to hit record highs this season with a big portion coming from mobile shopping. It is expected that online sales will hit a record $107.4 billion, up from $94.4 billion in 2016. Mobile shopping is expected to account for 34% of that $107.4 billion. Cyber Monday is expected to be the biggest online shopping day in history, with $6.6 billion in online sales, up 16.5% from last year.
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