Tuesday – December 3, 2024
UMBS opened up 6 bps. Small number but at least it’s green. S&P futures are up 2.5 points.
US equity futures pointed to a muted open on Wall Street as traders awaited a busy line-up of Federal Reserve speakers and data releases for clues on the path for interest rates. Swaps are pricing a more than 70% chance of a quarter-point rate reduction by the US central bank at its Dec. 17-18 meeting.
Contracts for the S&P 500 were flat after the index notched its 54th closing high of the year on Monday. Treasuries and the dollar edged lower, while the euro recovered a little of the previous day’s losses, caused partly by the turmoil around France’s budget.
Job Openings = 7.744m vs 7.480m f’cast, [7.372 prev]
Job Quits = 3.326m vs 3.071m prev
Manufacturing activity contracted for the 8th consecutive month, according to the ISM Report. That said, conditions improved compared to last month. The internals of the report are mainly good news: new orders and production increased, while the prices index fell markedly to near-neutral levels.
The issue of potential tariffs barely came up; and its impact will probably be positive in the short term, as companies accelerate spending plans to beat the increases. So, all the sturm and drang in the media over the issue seems to be partisan posturing.
Fed Governor Waller supports a rate cut at the upcoming December FOMC meeting. “At present, I lean towards supporting a cut in the policy rate at our December meeting … Overall, I feel like an MMA fighter who keeps getting inflation in a chokehold, waiting for it to tap out, yet it keeps slipping out of my grasp at the last minute.”
The day began with a bond rally courtesy of geopolitical headlines (martial law declared in South Korea). Traders were done reacting to the news by 9am and yields were heading back up after that with a 10am push from stronger JOLTS data. There were several friendly comments from Fed speakers in the early afternoon, but they only materially benefitted the short end of the yield curve (i.e. 2yr yields are lower on the day while 10yr yields are several bps higher).
Then South Korea rescinded martial law.
The other way to view the move is simply that the bond market rallied as much as it was willing to rally by the end of last week and yields haven’t been able to make any additional progress since then. Indeed, each of the past 3 trading sessions has seen a 10yr yield low of almost exactly 4.17%. Tomorrow brings an important slate of econ data with ADP employment, ISM Services, and an afternoon Powell speech.
UMBS closed the day down 11 bps, at 99.77
Clever found that the true cost of buying a home includes an additional $31,975 in home-buying expenses for buyers on top of their down payment. And that figure doesn’t include the average of $12,944 in commission buyers may pay their agents if the seller doesn’t. On average, home buyers spend the following amounts on repairs and renovations ($13,498), furniture, fixtures, and appliances ($6,446), closing costs ($4,754), concessions to the seller ($3,943), moving costs ($2,670), and private mortgage insurance ($387 annually).