CHM Blog

Yesterday the entire yield curve declined 8 bps in yield, this morning rates began 1 bp higher. MBS prices yesterday increased 32 bps, early this morning -3 bps. Yesterday the stock indexes were fractionally lower, this morning in pre-opening trading the indexes the indexes also slightly lower.

There is one key data point today, November Conference Board’s consumer confidence index.

OPEC+ meeting scheduled for Thursday after being delayed from last Sunday. Doesn’t appear there has been any progress to cut back production as the Saudis are asking for. The group is heading into the meeting with prices having dropped by around a 20% since late September due to plentiful supplies and concerns about the global economic backdrop.

At 9 am Case/Shiller Sept home price index expected to increase 0.7% month/month, as reported +0.7%; year/year 20 city price in August was +2.5%, in Sept +3.9%. The index the highest since 1989.

At 9:30 am the DJIA opened +23, NASDAQ -17, S&P -5. 10 year at 9:30 am 4.41% +1 bps. FNMA 6.5 30 year coupon at 9:30 am -13 bps from the close yesterday and +3 bps from 9:30 am yesterday.

At 10 am the November consumer confidence index from the Conference Board, the index expected at 101.5 from 102.6 in October, as released the index at 102.0 BUT October originally reported at 101.5 was revised to 99.1, a huge revision. The Present Situation Index—based on consumers' assessment of current business and labor market conditions—ticked down slightly to 138.2 (1985=100), from 138.6. The Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—rose to 77.8 (1985=100) in November, up from its downwardly revised reading of 72.7 in October. Despite this month's improvement, the Expectations Index remains below 80 for a third consecutive month—a level that historically signals a recession within the next year.

At 1 pm Treasury will auction $39B of 7 year notes, yesterday the 2 and 5 year auctions were not strongly bid.

Markets looking ahead to Thursday and Friday. Thursday October inflation with the PCE (the core month/month +0.2%, year/year +3.5% from 3.7%). Friday J Powell at Spelman College in Atlanta, speaking at 11 am and 2 pm.

Q1 2024 is likely to see equity markets decline from the preset levels. Consumers being hit with high rates, increasingly using credit cards and recent data indicates 30% are late payers and credit card issuers refusing to add increased limits. A lot has been said how good consumers are doing, those making that comment are not looking at real data, the consumer keeps spending but quickly headed for the brick wall. The S&P 500 has stalled in the past few days, with investors concerned about the health of US consumers as the crucial holiday shopping season ramps up.

PRICES @ 10:00 AM

10 year note: 4.40% +1 bp

5 year note: 4.37% -2 bp

2 year note: 4.84% -1 bp

30 year bond: 4.54% +1 bp

30 year FNMA 7.0: @9:30 am 102.36 -5 bp (unch from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 101.23 -13 bp (+3 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 99.82 -16 bp (+6 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 100.38 -4 bp (+16 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1334 +$0.0019

Dollar/Yen: 148.22 -0.47 yen

Dollar/Euro: $1.00984 +$0.0031

Dollar Index: 102.98 -0.21

Gold: $2024.00 +$11.60

Bitcoin: 37,426 +362

Crude Oil: $75.30 +$0.44

DJIA: 35,319 -14

NASDAQ: 14,211 -30

S&P 500: 4543 -7

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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