CHM Blog

At 8:30 am ET weekly jobless claims were expected at 224K unchanged from the previous week, claims increased to 235K. It was the sharpest one-week count in eight weeks. Continuing claims increased by 30 thousand to 1.972 million above estimates of 1.960 million. The employment sector is slowing; hiring is less robust over the last few weeks and will filter into what Powell may say tomorrow morning.

Also at 8:30 am, the August Philadelphia Fed business index thought to be +8.0 from 15.9 in July declined to -0.3. It usually doesn’t draw much interest though.

The Jackson Hole symposium is underway this morning. Out of the box Kansas City Fed president Jeffrey Schmid expressed doubt about lowering rates in September, saying policymakers still have more work to do on inflation. He was interviewed by CNBC and didn’t show a lot of interest in cutting rates. “We’re in a really good spot, and I think we really have to have very definitive data to be moving that policy rate right now,” “In September, we’ll get around tables and we’ll collaborate, and we’ll figure it out, but yeah, I think there’s a lot to be said between now and September.” His remarks didn’t move the bond market. The CME’s FedWatch still pricing in a nearly 80% chance of a quarter percentage point reduction at the September 16-17 FOMC meeting. Schmid also commented on mortgage applications becoming too excessive with paperwork… amen to that.

The debate continues, yesterday former PIMCO CEO and Allianz chief economic advisor Mohammad El Arian commented that the Fed’s 2% inflation target is too low, and the Fed is too dependent on data and said Powell is too backward viewing.

At 9:30 am the DJIA opened -194, NASDAQ -99, S&P -29. 10 year note 4.31% +1 bp. FNMA 6.0 30 year coupon at 9:30 am -2 bps from yesterday’s close and +2 bp from 9:30 am yesterday.

At 9:45 am August preliminary PMI manufacturing and service indexes. The manufacturing index thought to be 49.7 increased to 53.3, the service index estimates were 53.0 reported at 55.4. July manufacturing index 49.5, services 55.2.

At 10 am July existing home sales expected at 3.900 million from 3.930 million; reported at 4.01 million.

Powell has an opening here; he can mumble his well-worn words without tipping the scales. He can go on with inflation fears and slowing labor markets and markets can continue to believe the Fed will move on September 17th with uncertain outlooks and lower rates, but it is conjecture and must be backed by two very key releases between now and the meeting. Next Friday July PCE inflation report and on September 5th and the August employment report, both will determine whether the Fed moves or doesn’t, in the meantime its all speculation.

PRICES @ 10:00 AM

10 year note: 4.33% +3 bp

5 year note: 3.85% +3 bp

2 year note: 3.79% +2 bp

30 year bond: 4.93% +3 bp

30 year FNMA 6.0: @9:30 am 101.75 -2 bp (+2 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 103.34 unch (-1 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 101.61 unch (+1 bp from 9:30 am yesterday)

Dollar/Yen: 147.63 +0.30 yen

Dollar/Euro: $1.1639 -$0.0012

Dollar Index: 98.33 +0.11

Gold: $3,382.80 -$6.70

Bitcoin: 113,433 -848

Crude Oil: $62.59 -$0.62

DJIA: 44,709 -229

NASDAQ: 21,058 -115

S&P 500: 6377 -18

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.

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