CHM Blog

The Fed has essentially guaranteed a 25 bp increase on Wednesday. The issue is what comes out of Powell’s press conference. The question getting more attention now is, will the Fed have to tolerate an inflation level that is higher than the 2.0%. The Fed can’t push inflation down to 2.0% without creating economic suffering. At 4.8% now based on June core CPI. Rising hopes of a soft landing for the US economy likely hinge on the Federal Reserve’s willingness to tolerate inflation markedly higher than it would prefer.

On Thursday, the European Central Bank will deliver its decision. Another increase in borrowing costs is expected, but the ECB’s aggressiveness might be tempered by reports released today that showed economic activity in the Eurozone slumped to an eight-month low in July. The Financial Times reports that economists think the ECB could accelerate its quantitative tightening efforts alongside raising interest rates. The Eurozone composite PMI index fell to an eight-month low of 48.9 in July, from a downwardly revised 49.9 in June, (the WSJ estimate was 49.7). The Bank of Japan on Friday might leave rates unchanged but could say something about removing elements of its ultra-loose policy, such as buying bonds to suppress yields.

At 9:30 am the DJIA opened +83, NASDAQ +59, S&P +17. 10 year 3.82% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +6 bps and +3 bps from 9:30 am Friday. The gains were quickly erased; FNMA 6.0 coupon at 9:45 am -14 bps and down 20 bps from 9:30 am Friday.

At 9:45 am the PMI composite flash index; the composite at 52.0; manufacturing 49.0 and services 52.4.

PRICES @ 10:00 AM

10 year note: 3.81% -3 bp

5 year note: 4.06% -4 bp

2 year note: 4.84% -2 bp

30 year bond: 3.89% -1 bp

30 year FNMA 6.0: @9:30 am 100.94 +6 bp (+3 bp from 9:30 am Friday) (-20 bp at 9:45 am)

30 year FNMA 5.5: @9:30 am 99.58 +5 bp (+1 bp from 9:30 am Friday)

30 year GNMA 5.5: @9:30 am 99.61 (unch from 9:30 am Friday)

Dollar/Yuan: $7.1893 +$0.0015

Dollar/Yen: 141.19 -0.61 yen

Dollar/Euro: $1.1083 -$0.0042

Dollar Index: 101.16 +0.16

Gold: $1962.60 -$4.00

Bitcoin: 29,146 -997

Crude Oil: $77.86 +$0.79

DJIA: 35,366 +138

NASDAQ: 14,011 -21

S&P 500: 4547 +10

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.