November 5, 2018

Rates took a big hit on Friday after the employment reports reflected an economy with no signs of slowing down.  Tomorrow’s elections also represent another chance for strong volatility.  With our pricing specials ending on the 21st, now is a great time to lock.  Don’t gamble on the market!

Stocks are essentially unchanged in the AM as attention shifts towards the US midterm elections.  Tomorrow, voters will decide the fate of 435 House of Representative seats, and about 1/3 of the seats in the Senate.  Additionally, it looks like a quick deal between the U.S. and China that was hinted at last week is now off the table.  The S&P500 is currently trading at 2,719.75, 0.11% lower.

Treasuries are little changed to begin Monday’s exchange as investors eye the looming US midterm elections and Federal Reserve policy meeting Thursday.  Bloomberg currently has the odds of a rate hike on 11/8 pegged at 6.9%.  There will not be a press conference following November’s FOMC meeting.  Last week, the US 10-YR Note added 14bps, while the 2/10 yr spread widened about 4bps on the back of stronger-than-expected economic data.  The US 10-YR Note is currently trading at 3.1875%, 0.0247 lower.

TBA MBS’ are churning sideways in the AM after a large selloff in Friday’s exchange.  November’s strong Nonfarm Payrolls report sent investors careening out of MBS as unemployment hovered around a 48-year low, and wage gains topped 3% for the first time since 2009.  Liquid coupons are currently trading 0+ – 1+ tics higher as investors await the results of the US election and FOMC policy decision.

The USD is little changed to begin Monday’s exchange as investors hit pause in front of the midterm elections.  The DXY is currently trading at 96.34, 0.05% lower.

Oil is rallying in the AM after the US re-imposed sanctions on Iranian oil.  The US will temporarily allow eight countries to continue importing from Iran.  WTI is currently trading at 63.55, 0.65% higher.