CHM Blog

Markets opened this morning unchanged from last Friday. Last week the calendar was void of key data; the 10 year note yield increased 14 bps, the 2 year note +11 bps. FNMA 6.0 30 year coupon price fell 35 bps. This week has a lot of key data, led by inflation reports tomorrow and Friday. The estimates for January CPI tomorrow are expected to reveal inflation in January ebbed lower. Today nothing until 2 pm when Treasury will report its budget for January, not a factor for traders. Trading today likely to be quiet ahead of inflation data tomorrow.

The bond market is still hanging onto Fed cuts this year but given the increases week the new thinking is the Fed may still cut rates but later than had been thought. The Fed won’t lower rates at the March FOMC meeting, the present belief though, still holding to four 25 bp cuts this year. It is a moving target, the Fed is on the outlook for the economy, soft landing, hard landing, recession forecasts change quickly on each key report. The Fed making clear it wants more evidence of slowing inflation before beginning rate reductions yet worries that keeping rates high could trigger a decline in the economic outlook. Investors don’t seem to be concerned, the stock indexes making new all-time highs fully convinced that the economy is on solid footing. Thursday’s January retail sales will get attention.

At 9:30 am the DJIA opened -17, NASDAQ -8, S&P -1. 10 year note 4.16% -1 bp. FNMA 6.0 30 year coupon at 9:30 am +6 bps from Friday’s close and +7 bps from 9:30 am Friday morning.

Today not looking for much change in stocks or rates ahead the data coming tomorrow and through the reminder of the week. The key 10 year at 4.16% hasn’t breached 4.20% in a month and won’t do it today, the forecasts for CPI and PPI along with retail sales on Thursday are keys. Each day we get input from Fed officials, analysts, and investor groups, much of it now tilting to the belief the Fed will be cutting rates soon, a lot of that view already discounted in present levels. The potential of increased volatility in stocks and rates remains high, this week promises to be volatile after flat lining last week.

PRICES @ 10:00 AM

10 year note: 4.16% -1 bp

5 year note: 4.14% unch

2 year note: 4.49% unch

30 year bond: 4.38% +1 bp

30 year FNMA 6.0: @9:30 am 100.79 +6 bp (+7 bp from 9:30 am Friday)

30 year FNMA 6.5: @9:30 am 101.99 +3 bp (+5 bp from 9:30 am Friday)

30 year GNMA 5.5: @9:30 am 99.85 +12 bp (+1 bp from 9:30 an Friday)

Dollar/Yuan: $7.1934 +$0.0134

Dollar/Yen: 149.29 +0.01 yen

Dollar/Euro: $1.0774 -$0.0010

Dollar Index: 104.17 +0.06

Gold: $2,030.10 -$8.20

Bitcoin: 48,606 +563

Crude Oil: $76.98 +$0.14

DJIA: 38,688 +16

NASDAQ: 16,003 +13

S&P 500: 5027 unch

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