CHM Blog

Two key data points at 8:30 am ET this morning. Weekly jobless claims expected at 238K reported at 228K -4K from the week before, the 4-week average 237.50K from 237.25K. Claims the lowest in 4 weeks, expectations were that claims would be higher than the prior week by 4K.

July inflation (PCE) expected +0.2%, reported +0.2%, year/year +3.3% as expected; core PCE thought to be +0.2% month/month reported at +0.2%, year/year +4.2% as expected. Personal income +0.2% with estimates at +0.3%, spending expected +0.6% increased 0.8%. Core year/year at 4.2% was up from 4.1% in June.

The market reactions to the two releases left the 10 year note at 4.11% unchanged from yesterday, stock indexes slightly higher. Overall PCE +3.3% as expected but increased from 3.0% in June. Core inflation at 4.2% was expected but was up 0.1% from June, with inflation holding and weekly jobless claims declining it isn’t good news for the interest rate outlook, equally not a serious deviation from forecasts. The Fed won’t get too worried but based on this report inflation isn’t slowing. Weekly claims add to the view the labor market remains strong which isn’t what the Fed wants to see. Overnight Atlanta Fed Pres Bostic commented interest rates may be high enough, less reason to continue increasing rates, his remarks before the data.

At 9:30 am the DJIA opened +140, NASDAQ +25, S&P +9. 10 year note at 9:30 am 4.11% unchanged from yesterday. FNMA 6.0 30 year coupon at 9:30 am +3 bps and -2 bp from 9:30 am yesterday.

At 9:45 am August Chicago purchasing managers index was thought to be at 44.6 from 42.8 in July, the index increased to 48.7, still below the pivot at 50.0 for the last 12 months.

European Central Bank policymaker Schnabel repeated her worries about underlying price pressures, adding that there is no target for a peak ECB interest rate. Bank of England Chief Economist Pill said that policy should remain restrictive until core inflation slows.

August employment data tomorrow morning.

So far this morning the 10 year note hasn’t picked up momentum trading unchanged at 4.11%. MBS prices though showing a little strength.

PRICES @ 10:00 AM

10 year note: 4.11% unch

5 year note: 4.28% unch

2 year note: 4.89% +2 bp

30 year bond: 4.20% -3 bp

30 year FNMA 6.0: @9:30 am 100.20 +3 bp (-2 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 98.76 +11 bp (+3 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.01 +11 bp (-3 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2588 -$0.0259

Dollar/Yen: 146.15 -0.09 yen

Dollar/Euro: $1.0843 -$0.0081

Dollar Index: 103.65 +0.50

Gold: $1968.80 -$4.00

Bitcoin: 27,129 -114

Crude Oil: $82.58 +$0.95

DJIA: 35,024 +131

NASDAQ: 14,071 +51

S&P 500: 4527 +12

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.