CHM Blog

Markets began unchanged from yesterday ahead of the long-awaited comments from Kevin Warsh at Jackson Hole at 10 am ET, for the last two weeks markets have been anticipating what he will say. The title of his speech; “Financial Innovation: Implications for Payments and Policy.”

Chicago purchasing managers index at 9:45 am dropped to 47.1 on forecasts of 59.0. Under 50 is contraction. The latest data pointed to a renewed contraction in business activity and the steepest since December 2025. New orders declined sharply, dropping 15.4 points, but still above April's low. The production gauge slipped 8.8 points, recording its first and sizeable contraction since last December. Meanwhile, supplier deliveries eased 2.6 points but remained in expansion for the 19th consecutive month.

Warsh: inflation has been over the Fed’s 2.0% for 5 years; overall commodity prices bears watching: doesn’t believe current rates are restrictive; Wall Street and main street resilient; Fed’s policy of forward guidance has lost its welcome; short term rates are predominant to the Fed’s monetary policy; Fed has more work to do on inflation; Warsh continued to say market participants should decide and not rely on the Fed’s forward guidance, what he has been saying since he took over last May, wants markets to lead; backward data should be less important than forward outlooks; Fed’s forward guidance may have led to the Fed’s slow response to the pandemic; the Fed’s target of 2.0% inflation is solid; economy is doing well; a quieter Fed makes the Fed more efficient; Fed’s policy is not restrictive; uncovential policy should be restricted to serious issues.

At 10 am the final University of Michigan consumer sentiment continues to weaken

PRICES @ 10:30 AM

10 year note: 4.69% +2 bp

5 year note: 4.44% +4 bp

2 year note: 4.30% +6 bp

30 year bond: 5.17% -2 bp

30 year FNMA 6.0: @10:30 am 101.27 -16 bp (-18 bp from 9:30 am yesterday)

30 year FNMA 5.5: @10:30 am 99.24 -210 bp (-20 bp from 9:30 am yesterday)

30 year GNMA 6.0: @10:30 am 101.55 -6 bp (unch from 9:30 am yesterday)

Dollar/Yen: 159.90 +0.51 yen

Dollar/Euro: $1.1611 -$0.0040

Dollar Index: 99.52 +0.35

Gold: $4,601 -$63.00

Bitcoin: 79,273 -657

Crude Oil: $82.82 -$0.71

DJIA: 53,612 +47

NASDAQ: 26,563 +22

S&P 500: 7741 +10

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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