CHM Blog

Markets got a boost today on UK inflation slowing to the weakest level in more than a year, prompting traders to pare bets for a 50-bp BOE hike next month. Headline annual inflation rose 7.9% last month, less than economists’ forecasts of 8.1%, and way below May’s 8.7%, according to the Office for National Statistics. The core reading, which strips out volatile prices like food and energy, dropped from 7.1% to 6.9%, which was 0.2 percentage points below forecasts. The reverse happened in the euro area, where core prices picked up more than expected. Yesterday afternoon MBS prices declined from morning levels prompting lenders to re-price lower than the morning levels.

Goldman Sachs Group Inc. shares declined in premarket trading after the Wall Street giant reported one of its weakest quarters for profitability in years.

June housing starts and permits; starts fell in June after surging in May but permits for future construction increased solidly as a severe shortage of previously owned houses for sale supports new construction. Permits of single-family homes increased 2.2% in June to a rate of 922,000 units. Single-family housing starts, which account for the bulk of homebuilding, dropped 7.0% to a seasonally adjusted annual rate of 935,000 units last month, the Commerce Department said on Wednesday. Data for May was revised up to show starts vaulting to a rate of 1.005 million units, instead of 997,000 units as previously reported. Yesterday the NAHB July housing market index increased to a 13-month high, with fewer builders reporting offering incentives to attract buyers.

Weekly MBA mortgage apps last week were up 1.1%, purchase apps -1.3% while re-finance apps increased 7.3%.

At 9:30 am the DJIA opened +117, NASDAQ +48, S&P +14. 10 year at 9:30 am 3.74% -4 bps. FNMA 6.0 30 year coupon at 9:30 am +9 bps and -14 bps from 9:30 am yesterday.

Stocks look like panic buying these days, FOMO (fear of missing out). We wouldn’t step in front of it but stocks from a technical perspective very overbought.

PRICES @ 10:00 AM

10 year note: 3.74% -5 bp

5 year note: 3.98% -3 bp

2 year note: 4.75% -2 bp

30 year bond: 3.89% -1 bp

30 year FNMA 6.0: @9:30 am 101.05 +9 bp (-14 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.90 +7 bp (-1 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.73 unch (-15 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2226 +$0.0425

Dollar/Yen: 139.68 +0.85 yen

Dollar/Euro: $1.216 -$0.0014

Dollar Index: 100.20 +0.26

Gold: $1981.90 +$1.10

Bitcoin: 28,994 +199

Crude Oil: $76.76 +$0.97

DJIA: 35,146 +192

NASDAQ: 14,400 +47

S&P 500: 4575 +20

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.