CHM Blog

Last Friday’s employment report sent MBSs lower, the 10 year note increased 11 bps to close at 4.51%, MBSs dropped 31 bps. The stronger jobs reduced the potential for a rate cut. This week we get CPI and PPI inflation data, treasury auctions (3s, 10s and 30s).

Rate markets began this morning unchanged from Friday with eyes on inflation and treasury auctions the keys this week on economic news.

The US and China in talks in London this morning, the main topic, rare earth minerals that China has and the US needs. The talks aim to resolve issues such as rare-earth exports, tariffs, and restrictions on advanced technology, with the US seeking to restore flows of critical minerals and China seeking tariff reductions and an easing of export controls. The prior meeting in Geneva didn’t accomplish anything, this go round is likely to yield some concessions but very narrowly, the wide issues a long way off. Deflationary readings in China's CPI and PPI for May reported but its trade surplus was larger-than-expected with imports showing a bigger drop than the market had expected.

A lot of debate when the Fed may cut rates again, it ebbs back and forth on each key economic release. Will any rate cuts actually help bring long term rates down? Based on recent Fed cuts not only did long rates not decline, they increased. The climbing US debt will be a high hurdle for long term rates including mortgage rates. Last year the Fed cut 100 bps, the 10 year note yield increased. September 2024 50 bps, November 2024 25 bps, December 2024 25 bps. September 2024 the 10 year at 3.62%, by the end of December 2024 the 10 yield 4.62%, today 4.51%. Lower long-term rates will be driven by a big drop in inflation and a softening economic outlook.

The demand for the Treasury auctions along with inflation readings are the keys this week.

PRICES @ 10:00 AM

10 year note: 4.50% -1 bp

5 year note: 4.10% -2 bp

2 year note: 4.02% -2 bp

30 year bond: 4.97% unch

30 year FNMA 6.0: @9:30 am 100.70 +1 bp (-14 bp from 9:30 am Friday)

30 year FNMA 6.5: @9:30 am 102.44 -7 bp (-29 bp from 9:30 am Friday)

30 year GNMA 6.0: @9:30 am 100.73 unch (-16 bp from 9:30 am Friday)

Dollar/Yen: 14.70 -0.15 yen

Dollar/Euro: $1.1401 +$0.0005

Dollar Index: 99.14 -0.05

Gold: $3,339.20 -$7.40

Bitcoin: 107,336 +983

Crude Oil: $64.44 -$0.14

DJIA: 42,656 -107

NASDAQ: 19,569 +39

S&P 500: 6001 +1

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.