Wednesday, October 16, 2019

Daily Market Report 10/16/19  September was not kind to Retail Sales, as they report a contraction of 0.3% in September; and when you exclude big ticket items, like Autos, then they dropped 0.1%.  This report increased the likelyhood of the Fed cutting rates at it's next FOMC from 78% to 90% chance.  Business Inventories remain unchanged MoM in August.  However, today's bright spot, lies with the Home Builder's Index, which measures the confidence level for Home Builders.  It jumped from 68 to 71 in October, which is a 20 month high. Later today, the Fed Beige Book will be released, which will give us a more Micro-Economic viewpoint of the US Economy.  Stocks are trading in Negative Territory on recent bills passed by the US House of Representatives that take aim at support for the Hong Kong Protests, which will likely lead to China's ire.  Also, the Fed has begun a form of QE by buying $65 Billion of short-term Treasuries per month in order to create more liquidity and flatten out the Yield Curve.  This was first reported by BofJ last month, in order to protect it's Banking system.  There will be a few Fed Members speaking again today.  Also, more Q3 Corporate Earnings will be released, which will include Netflix, which many investors are awaiting.  Meanwhile, MBS is Up 11bps, which may lead to Lenders to provide better pricing on Mortgage Rates, compared to where we closed yesterday.  There was a weakening in the Market yesterday, so Rates worsened in the late morning (PST).  Yields are down only 1bps to 1.76%.

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