CHM Blog

Equity markets began generally unchanged this morning. At 8 am ET the 10 at 3.50% +8 bps, MBS prices -30 bps. By 9 am 3.46% and MBS prices down just 5 bps.

A heavy week; the FOMC, April employment data, JOLTS job openings, April manufacturing and services, Q1 productivity and unit labor costs. The ECB is also scheduled to set rates. The consensus is a 25 bp increase from the Fed and then a pause after that, that is what is presently discounted in current rate levels. On Wednesday, the ECB decision is between a quarter or half-point move and policymakers have signaled that a terminal rate of as high as 4% — compared to 3%. Will the Fed pause as is thought, or will they keep going to kill off inflation? Back in the 70s the Fed increased, paused, increased, and paused again. The result, inflation continued to increase before Paul Volker stepped in and crushed inflation increasing the FF rate 20% as the expense of the economic growth. The BOE will increase its rate on May 11th.

So far, the tightening hasn’t helped much; consumers leading the economic growth; the core PCE, the Fed’s go to inflation read, has increased to 4.9% between January and March. The history of the Fed’s miscues barely remembered by most market participants, 50 years ago but that period between 1970 and 1982 saw rate increases, then rate cuts and more rate increases. It was the Fed’s worst mess since WW II according to Wharton professor Jeremy Siegel that once dubbed “the greatest failure of American macroeconomic policy in the postwar period.”

At 9:30 am the DJIA opened +50, NASDAQ -11, S&P -1. 10 year 3.47% +5 bps. FNMA 6.0 30 year coupon at 9:30 am -3 bps and -1 bp from 9:30 am Friday, the 5.5 30 year coupon at 9:30 am -11 bps and -11 bps from 9:30 am Friday.

At 9:45 am April PMI manufacturing index expected at 50.4, as reported the index at 50.2.

At 10 am April ISM manufacturing index expected at 46.8

PRICES @ 10:00 AM

10 year note: 3.50% +8 bp

5 year note: 3.59% +12 bp

2 year note: 4.14% +14 bp

30 year bond: 3.72% +4 bp

Libor Rates: 1 month 5.062%; 3 month 5.302%; 6 month 5.407%; 1 year 5.366% (4/28/23)

30 year FNMA 6.0: @9:30 am 101.83 -3 bp (-1 bp from 9:30 am Friday) (at 10 am -12 bps)

30 year FNMA 5.5: @9:30 am 100.66 -11 bp (-11 bp from 9:30 am Friday)

30 year GNMA 5.5: @9:30 am 100.47 -12 bp (+13 bp from 9:30 am Friday)

Dollar/Yuan: $6.9121 unch

Dollar/Yen: 136.82 +0.50 yen

Dollar/Euro: $1.1021 +$0.0003

Dollar Index: 101.70 +0.04

Gold: $2012.10 +$13.00

Bitcoin: 28,538 -810

Crude Oil: $75.74 -$1.04

DJIA: 34,173 +75

NASDAQ: 12,214 -12

S&P 500: 4170 +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.