CHM Blog

The US/China trade talks ended with agreements on rare earth trade with China and other agreements. “We have reached a framework to implement the Geneva consensus and the call between the two presidents,” U.S. Commerce Secretary Howard Lutnick told reporters. In mid-May in Geneva both sides agreed to a 90 day suspension on tariffs then it broke down when each side accused the other of violating the agreement. Both sides now back to brief their leaders and resolve any uncertainties, in other words it isn’t a done deal yet.

Market reaction isn’t much, stock indexes started slightly lower, rates slightly higher but then flipped to a little lower by 8:30 am ET when May CPI inflation report hit.

May CPI is better than forecasts. Month/month overall CPI was expected +0.2% but increased 0.1% and down from +0.2% in April; year/year overall +2.4% against 2.5% forecasts but up from 2.3% in April. Core CPI month/month thought to be +0.3% increased 0.1% and down from 0.2% in April, year/year core estimates were +2.9%, reported at 2.8% unchanged from April. The reaction sent the 10 year note yield from 4.50% +2 bps to 4.44% -4 bp. MBS prices from -7 bps to +6 bps on the initial reaction. Recent inflation data, PCE and two months of CPI have not shown much increase in inflation, today’s report indicates a decline. The overwhelming outlook is inflation will increase, so far not yet.

Weekly MBA mortgage applications last week increased 12.5% from the prior week, purchase applications +10.3%, re-finances +15.6%. Apps the best in over a month.

At 9:30 am the DJIA opened +31, NASDAQ +67, S&P +12. 10 year at 9:30 am 4.45% -3 bps. FNMA 6.0 30 year coupon at 9:30 am +16 bps from yesterday’s close and +21 bps from 9:30 am yesterday.

At 1 pm Treasury will auction $39B of 10 year notes, yesterday’s 3 year note mirrored the soft demand for treasury debt recently. Today’s 10 year will get close attention from traders.

At 2 pm May Treasury balance, expected -$313B after +$258.4B in April.

The next potential movement in rates is the 10 year auction at 1 pm or anything that might come from the White House.

PRICES @ 10:00 AM

10 year note: 4.44% -4 bp

5 year note: 4.04% -6 bp

2 year note: 3.97% -6 bp

30 year bond: 4.92% -1 bp

30 year FNMA 6.0: @9:30 am 100.91 +16 bp (+21 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.67 +14 bp (+16 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 100.96 +7 bp (+12 bp from 9:30 am yesterday)

Dollar/Yen: 145.14 +0.25 yen

Dollar/Euro: $1.1462 +$0.0036

Dollar Index: 98.84 -0.26

Gold: $3,357.80 +$14.40

Bitcoin: 109,694 +137

Crude Oil: $66.21 +$1.23

DJIA: 42,943 +76

NASDAQ: 19,743 +28

S&P 500: 6045 +6

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.