CHM Blog

The 10 year note began higher this morning, at 8 am ET 4.14% +4 bps. Weekly jobless claims at 8:30 am expected at 222K were 218K, -9K from the previous week, 4-week average of claims at 212.25K from 208.50K the prior week. Continuing jobless claims for the week ending January 27 decreased by 23,000 to 1.871 million. Job growth remains strong while inflation cools, supporting a soft landing for the economy rather than the thought of a recession. Markets presently fully behind the view that even a slowing of growth won’t derail economic improvement albeit at a slower pace allowing the Fed more leeway in lowering rates and avoiding pushing the economy into recession that was the Fed’s worry just a month ago.

The claims data is the last data this week in a week that saw very little economic news. It has been a week of Fed officials and Treasury refunding with 3s, 10s, and this afternoon 30 year bonds, the demand for the 3 and 10 was strong and we expect this afternoon’s $25B 30 year bond sale will also be well-received.

The plethora of Fed officials through the week are generally in line with each other and Fed chair Powell’s press conference a week ago. The Fed will cut rates this year, but the pace of reductions isn’t going to be as swift and as deep as markets were anticipating. The recent increase in rates reflecting slower cuts than had been widely anticipated. The rapid fall in rates from October driven by excess enthusiasm cooling off, but the path to somewhat lower rates remains intact.

At 9:30 am the DJIA opened +76, NASDAQ +3, S&P unch. 10 year at 9:30 am 4.14% +4 bps. FNMA 6.0 30 year coupon at 9:30 am -9 bps from yesterday’s close and -20 bps from 9:30 am yesterday.

At 1 pm $25B 30 year bond auction.

This week didn’t have much key data, next week though we will get the next round of inflation data, January CPI and PPI, retail sales for January, export and import prices, January housing starts and permits, January industrial production and factory use, consumer sentiment index that recently has been surprisingly upbeat.

The only thing left today on the schedule, the $25B 30 year bond auction at 1 pm, based on strong demand for the 3 and 10 year notes the auction should be well bid. The key 10 year has very strong resistance at 4.20%, expect it to hold until next week’s inflation data, Tuesday January CPI.

PRICES @ 10:00 AM

10 year note: 4.15% +5 bp

5 year note: 4.10% +2 bp

2 year note: 4.45% unch

30 year bond: 4.37% +4 bp

30 year FNMA 6.0: @9:30 am 100.84 -9 bp (-20 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 101.94 -7 bp (-19 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.89 -10 bp (-22 bp from 9:30 am yesterday)

Dollar/Yuan: no quotes

Dollar/Yen: 149.31 +1.13 yen

Dollar/Euro: $1.0762 -$0.0011

Dollar Index: 104.31 +0.26

Gold: $2,045.60 -$6.10

Bitcoin: 45,118 +1,003

Crude Oil: $75.18 +$1.32

DJIA: 38,694 +16

NASDAQ: 15,775 +19

S&P 500: 4995 -0.47 (struggling at 5,000)

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.