CHM Blog

Yesterday rates increased on inflation concerns when March CPI is reported tomorrow, this morning the opposite, rates began lower. The 10 year note rose 3 bps yesterday, at 8:30 am ET the note down 3 bps, MBS prices fell 13 bps yesterday, this morning up 14 bps. The stock indexes marked time yesterday, today in pre-open futures trading at 8:30 am the indexes continuing to trade sideways. Trading volume yesterday, the lowest since the Christmas holidays. Likely today will be the same, quiet on low volume.

CPI tomorrow morning is expected to show some moderation in inflation, the core month/month +0.3% from +0.4%, year/year 3.7% from 3.8%. Overall year/year CPI thought to have increased to 3.5% from 3.2%. It’s the core the Fed focuses on more than the overall data.

It isn’t news that inflation reports are the driving influence in US financial markets. The anticipation for cutting rates is one of uncertainty. Some Fed officials want to wait longer, others still talking three cuts. Powell has made a point that he isn’t yet sold on inflation declining, saying there has to be a trend of lower inflation; so far the past few months inflation has been choppy, looking good one month then not so good the following month.

Yesterday, Jamie Dimon, CEO at JP Morgan Chase in his letter to shareholders, said he worries about the increasing US debt, the increasing military build ups and of course inflation expectations. The increasing US debt is the next chapter once inflation concerns fade (whenever that occurs) and will keep US and global interest rates higher than many presently believe, especially potential home buyer and sellers. Residential real estate is suffering, one reason is the remembrance of the low interest rates last year and some hangover that those lows will return and that isn’t in the cards.

At 9:30 am the DJIA opened +91, NASDAQ +78, S&P +19. 10 year at 9:30 am 4.39% -4 bps after increasing 3 bps yesterday. FNMA 6.0 30 year coupon at 9:30 am +18 bps from yesterday’s close and up 17 bps from 9:30 am yesterday.

CPI tomorrow, PPI on Thursday. Treasury begins today to borrow $124B of notes and bonds over the next three days.

Today at 1 pm $58B of 3 year notes, tomorrow $39B of 10s.

Looking for rates to remain in the tight ranges today ahead of CPI on Wednesday, the current consensus is core inflation expected to ease a little.

PRICES @ 10:00 AM

10 year note: 4.38% -5 bp

5 year note: 4.39% -5 bp

2 year note: 4.76% -4 bp

30 year bond: 4.52% -3 bp

30 year FNMA 6.0: @9:30 am 100.60 +18 bp (+17 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.07 +12 bp (+12 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.60 +13 bp (+18 bp from 9:30 am yesterday)

Dollar/Yuan: unch

Dollar/Yen: 151.76 -0.08 yen

Dollar/Euro: $1.0881 +$0.0020

Dollar Index: 103.88 -0.26

Gold: $2,373.50 +$23.50

Bitcoin: 70,300 -1371

Crude Oil: $86.24 -$0.18

DJIA: 38,829 -64

NASDAQ: 16,314 +63

S&P 500: 5206 +4

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

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.

MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.