Markets concerned over growing US debt

___

Published Date 11/18/2024

Last Friday the rate markets showed a little volatility, the 10 year note ran to 4.50% then fell back to close unchanged at 4.44%, this morning the note began at 4.49% +5 bps and MBS prices started down 12 bps from unchanged on Friday.

The bond market is consumed with what the incoming administration’s policies will do to the growing debt. Tariffs and tax cuts worry investors that cutting spending and other campaign promises of reduced government spending won’t be enough to offset the worries of tariffs. The other pressure point now is increasing concerns the Fed won’t cut rates at the December FOMC meeting. Investors had anticipated that Fed easing would bring a windfall. Instead, 10-year yields have soared almost three quarters of a point since September 18th, marking the biggest jump in the first two months of a rate-cutting cycle since 1989. Powell rocked the boat last week, saying the Fed is in no hurry to lower rates although the trading based on the possible cut is a toss-up.

The economy is holding well overall, jobs are slipping but still no reductions apparent in the data. Last week, weekly jobs reported a continuing decline in continuing claims. The debt is a huge issue for bond investors and presently the outlook for increased spending and deficits is dominating the bond market.

At 9:30 am the DJIA opened -55, NASDAQ +23, S&P -1. 10 year note yield 4.45% +1 bp. FNMA 6.0 30 year coupon at 9:30 am -6 bp from Friday’s close and +4 bp from 9:30 am Friday.

At 10 am November HAHB housing market index, expected unchanged at 43, the index increased to 46, the best in the last three months.

The 10 year note has likely found a momentary top at 4.50% but buyers are reluctant to step into the viscous climb.

This Week’s Economic Calendar:

Monday,

10 am November NAHB housing market index (expected unch at 43, reported at 46)

Tuesday,

8:30 am October housing starts and permits (starts 1.3 million from 1.354 million; permits 1.4 million from 1.428 million)

Wednesday,

7 am weekly MBA mortgage applications

1 pm 20 year bond auction

Thursday,

8:30 am weekly jobless claims (219K from 217K)

November Philadelphia Fed business index (+7.0 from +10.3)

10 am October existing home sales (3.9 million from 3.84 million in September)

October leading economic indicators (-0.3% from -0.5%)

Friday,

9:45 am November prelim PMI composite index (manufacturing index 48.8 from 48.5, services sector 55.21 from 55.0)

10 am University of Michigan mid-month consumer sentiment index (73.0 from 73.0 in October)

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker - NY Department of Financial Services; Licensed Mortgage Banker - CT Department of Banking; Licensed Mortgage Banker - PA Department of Banking, Licensed Mortgage Lender – FL Office of Financial Regulation

All rates, fees and programs are subject to change without notice.