CHM Blog

Yesterday the dam broke, the 10 year note decisively broke its technical resistance level and increased 7 bps to 3.93%. This morning more buying for the 10 year, at 8:45 am ET 4.04% +1 bps, MBS prices at 8:45 am -53 bps. ADP reported its private jobs increased 497K; the highest increase going back to July 2022. Most of the increases were in a few states; Michigan, and New York, and might partly reflect annual summer retooling at auto plants.

Weekly jobless claims expected at 245K, reported at 248K an increase of 12K from the prior week; the 4-week average of claims 253.25K from 256.75K the prior week.

Weekly MBA mortgage applications decreased 4.4% last week, purchase apps -4.6%, re-finance apps -4.1%. Claims increased in 30 of the 53 states and territories that report these figures to the federal government. The other 20 posted declines.

NY Fed president John Williams added his take on what the Fed may do, he essentially echoed most all other Fed officials that inflation is too high, and more work has to bee done. “We can take some time and assess and collect more information and then be able to act, knowing that we also communicated through our projections that we don’t think we’re done, based on what we know,” Williams said Wednesday during a discussion held at the New York Fed as part of the annual meeting of the Central Bank Research Association. “And obviously we’re absolutely committed to achieving our 2% inflation goal.”

At 9:30 am the DJIA opened -211, NASDAQ -144, S&P -38. 10 year at 9:30 am 4.03% +9 bps. FNMA 6.0 30 year coupon at 9:30 am -41 bps and -62 bps from 9:30 am yesterday; the 5.5 coupon -47 bps and -80 bps from 9:30 am yesterday.

At 9:45 am the final PMI composite index expected at 54.1, the index increased to 54.4.

At 10 am the June ISM service sector index reading was 53.9 percent, 3.6 percentage points higher than May's reading of 50.3 percent. The composite index indicated growth in June for the sixth consecutive month after a reading of 49.2 percent in December, which was the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 59.2 percent, a 7.7-percentage point increase compared to the reading of 51.5 percent in May. The New Orders Index expanded in June for the sixth consecutive month after contracting in December for the first time since May 2020; the figure of 55.5 percent is 2.6 percentage points higher than the May reading of 52.9 percent.

At 10 am May JOLTS job openings, expected at 9.9 mil from 10.32 mil; openings 9.82 mil.

The data this morning continues to point to the Fed increasing the FF rate at the July FOMC meeting (the 26th). A strong employment report tomorrow will cement that theory. Looking at where the 10 year is trading this morning traders already positioning for an increase. The 2 year note this morning up 12 bps and over 5.00% (5.08%).

PRICES @ 10:00 AM

10 year note: 4.03% +9 bp

5 year note: 4.40% +15 bp

2 year note: 5.07% +10 bp

30 year bond: 3.98% +5 bp

30 year FNMA 6.0: @9:30 am 99.92 -41 bp (-62 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 98.45 -47 bp (-80 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 98.53 -42 bp (-77 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2458 -$0.0017

Dollar/Yen: 143.70 -0.96 yen

Dollar/Euro: $1.0882 +$0.0027

Dollar Index: 103.17 -0.20

Gold: $1919.10 -$8.00

Bitcoin: 30,517 +51

Crude Oil: $71.46 -$0.33

DJIA: 33,878 -411

NASDAQ: 13,586 -205

S&P 500: 4391 -56

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.