CHM Blog


Daily Market Analysis

There was a time not too long ago that after 4 pm ET not much would happen, recently that has changed in the chaotic MBS markets. Yesterday at 4 pm MBS prices were 38 bps better on the session, at 5 pm MBSs finished up 70 bps on the day. We have seen this last hour be very volatile of late. This morning the 10 yr. note is improving, at 8:30 am its yield at 3.88% -7 bps from yesterday and adding to the increase in MBS prices (+23 bps from yesterday). Yesterday the 10 hit 4.00% at one point then retreated. Nothing has changed, as we have noted numerous times in recent days, the treasury and MBS markets are very over-extended and due to consolidate. Every technical indicator we use has been flashing overbought near-term signals for days and MBS prices oversold. Maybe some relief today.

Weekly MBA mortgage applications last weekly were down again, the composite -3.7% from the prior week, purchase apps -0.4% while re-finances dropped 10.9%.

The advance US trade deficit for August was thought to be -$88.7B, as reported -$87.3B. Imports m/m -1.7% after -2.9% in July; exports m/m -0.9% from +0.3% in July.

The 10 yesterday hit its highest level since 2008 before slipping back in late afternoon trading. Treasuries remain headed for their biggest annual loss since least 1973, with a Bloomberg gauge of the debt slumping 14% this year. More emphasis from James Bullard, St. Louis Fed, warning the central bank must keep raising interest rates to retain its credibility.

Expect market volatility to continue and increase as liquidity is drying up, traders say the Fed’s reduction of its balance sheet is contributing to volatility, it’s a big issue in the MBS markets as well as treasuries. The Bank of England jumped in to stop its extreme unsettled markets, the 30 yr. gilt dropped 86 bps, the largest decline since 1996 according to the news. The BOE said it would carry out temporary purchases of long-dated debt and delay planned bond sales under quantitative tightening. The rally came after selling drove the yield up more than a percentage point since Friday to as high as 5.14%, a level last seen in 1998.

San Francisco Fed Pres. Mary Daly in a conference yesterday: To keep inflation low and stable, “we have to balance that off with our dual mandate with full employment,” Daly said at the Symposium on Asian Banking and Finance. “Trying to navigate that to bring inflation down while we do so as gently as possible, not to tip unnecessarily the economy into a downturn that actually influences the full employment part of our mandate, is a struggle”… “While there’s hopeful signs, I’m always mindful that we might have to do a little more on demand because supply chains are just sluggish, or supply is sluggish to recover”… “Some of the factors that were pushing inflation down and even keeping the neutral rate of interest so low may be changing,” Daly said. “We might very well come out of this episode with higher inflation and be in a world where we’re trying to balance inflation to the target.” Also yesterday St. Louis Fed chief James Bullard warned that inflation is a “serious problem” and that the central bank’s credibility was on the line.

The rate markets may settle down over the next few days, if they do don’t get caught up with any ideas the Fed will back away from its hard stated objective of another 125 bp increase in the FF rate by the end of this year, some of which is already being discounted in present rate levels.

At 9:30 am the DJIA opened +97, NASDAQ -13, S&P +6. 10 yr. at 9:30 am 3.82% -13 bps. FNMA 5.5 30 yr. coupon +57 bps and +90 bps from 9:30 am yesterday. From now on we will be tracking the FNMA 6.0 coupon, at 9:30 am +57 bps from yesterday’s close.

At 10 am August Pending Home sales, expected -1.4% as released -2.0%, yr./yr. -24%.

At 1 pm Treasury will sell $36B of 7 yr. notes. Yesterday and Monday the 5 yr. and 2 yr. auctions were soft with bidding lower. The dollar’s strength causing soft demand.

PRICES @ 10:00 AM

10 yr note: 3.85% -10 bp

5 yr note: 4.07% -13 bp

2 Yr note: 4.17% -11 bp

30 yr bond: 3.77% -6 bp

Libor Rates: 1 mo 3.12%; 3 mo 3.642%; 6 mo 4.208%; 1 yr 4.851% (9/27/22)

30 yr FNMA 6.0: 101.55 +57 bps

30 yr FNMA 5.5: 99.81 +61 bp (+91 bp from 9:30 am yesterday)

30 yr GNMA 5.5: 100.78 +101 bp

Dollar/Yuan: $7.2245 +$0.0466

Dollar/Yen: 144.28 -0.53 yen

Dollar/Euro: $0.9609 +$0.0014

Dollar Index: 114.24 +0.13

Gold: $1653.50 +$17.30

Bitcoin: 19.103 +49

Crude Oil: $79.48 +$0.98

DJIA: 29,249 +114

NASDAQ: 10,824 -5

S&P 500: 3657 +10

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 28th, 2022 9:39 AM

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Higher

Higher

High
(by Sigma Research)
Real Estate Report

Inflation Costing Average American Family $11,500 This Year:

Americans are set to fork out an extra $11,500 this year if they want to enjoy the same standard of living they maintained in 2020, according to new estimates from NerdWallet.

The estimates, published in August, were based on inflation and annual spending data from the U.S. Bureau of Labor Statistics (BLS). Analysts at NerdWallet looked at how spending would compare this year to 2020 when the COVID-19 pandemic began.

“In all of 2020, American households spent $61,300, on average,” according to analysts.

“This number includes everything we spend our money on: housing, food, entertainment, clothing, transportation, and everything else.”

“In 2022, it stands to reach $72,900, a difference of more than $11,500 if consumers want to maintain the same standard of living,” they wrote.

According to analysts, total monthly household expenditures are up $961 from 2020, while spending on groceries is up $101. Shelter is up $120 and household utilities are up $70 per household, while gasoline has risen by a whopping $209.

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market worsened by -113 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Manufacturing and 3) The Fed.

1) Inflation: We get the Fed's preferred inflation measure on Friday. The problem is that both Core PCE and Headline PCE are expected to move higher in this latest release.

2) Manufacturing: We get a big dose of manufacturing data this week with Durable Goods Orders, Chicago PMI and the Richmond Fed.

3) The Fed: Now that the media blackout is over, we will hear from a slew of Feds this week:

09/26 Susan Collins, Raphael Bostic, Loretta Mester

09/27 Charles Evans, James Bullard, Mary Daly

09/28 Raphael Bostic, James Bullard, Charles Evans, Jerome Powell

09/29 Loretta Mester, Mary Daly

09/30 Lael Brainard, John Williams

This Week's Potential Volatility: High

This morning markets are under heavy pressure due to the Bank of England. Volatility has started extremely high and will likely not calm down.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 26th, 2022 2:15 PM

Daily Market Analysis

Last Friday, after heavy selling the previous day MBS prices ended unchanged. This morning in early trade the 10 yr. note increased 10 bps to a new high at 3.79%: by 9 am 3.75% +6 bps and MBS prices at 9 am down 66 bps.

The dollar continues to strengthen. Last week to defend the fall of the Japanese yen its central bank intervened in the markets. Today its in England, the pound got hammered and sparked talk that the Bank of England has to do something, the pound now at an all-time low against the dollar. UK gilts sent 10-year yields above 4% for the first time since 2010. Sterling dropped to as low as $1.0350, taking it closer to parity with the dollar. Chancellor Kwasi Kwarteng’s comment on Sunday that there’s “more to come” on tax cuts -- prompted calls for aggressive rate hikes from the Bank of England, with some urging emergency action as soon as this week. England in turmoil as the country grapples with a cost-of-living crisis and a recession. The Yuan and yen are both tumbling due to the growing disparity between the hawkish Federal Reserve and dovish policy makers in China and Japan.

Global assets extended their selloff on Monday as fears of faster inflation and global recession continued to rise. An index of global stocks traded near the lowest since 2020, while S&P 500 futures fell 0.8% as of 6:08 a.m. New York time on concern that Federal Reserve rate hikes to combat persistently elevated inflation will hurt the economy.

At 9:30 am the DJIA opened -100, NASDAQ +67, S$P +2. 10 yr. at 9:30 am 3.76% +8 bps. FNMA 5.5 30 yr. coupon -40 bps and -32 bps from 9:30 am Friday.

At 1 pm $43B 2 yr. note auction.

August apartment asking rents nationally fell 0.1% from July, according to a report from property data company CoStar Group. It was the first monthly decline in rent since December 2020, the company said.

PRICES @ 10:00 AM

10 yr note: 3.77% +8 bp

5 yr note: 4.03% +4 bp

2 Yr note: 4.22% +1 bp

30 yr bond: 3.66% +5 bp

Libor Rates: 1 mo 3.080%; 3 mo 3.628%; 6 mo 4.201%; 1 yr 4.835% (9/23/22)

30 yr FNMA 5.0: 97.63 -47 bp (-50 bp from 9:30 am Friday)

30 yr FNMA 5.5: 99.56 -40 bp (-32 bp from 9:30 am Friday)

30 yr GNMA 5.0: 97.89 -56 bp (-58 bp from 9:30 am Friday)

Dollar/Yuan: $7.1519 +$0.0235

Dollar/Yen: 144.10 +0.76 yen

Dollar/Euro: $0.9669 -$0.0020

Dollar Index: 113.32 +0.13

Gold: $1651.30 -$4.50

Bitcoin: 19.214 +326

Crude Oil: $79.14 +$0.67

DJIA: 29,503 -87

NASDAQ: 10,982 +114

S&P 500: 3694 +4

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 26th, 2022 9:32 AM

The 10 yr. note increased 18 bps, MBS prices down 100 bps. After the Fed increase on Wednesday central banks around the world also increased rates, one of the most prolific and wide range increases in many years. Since the beginning of August, the 10 yield has increased 1.25%, since the beginning of Sept up 66 bps.

After the FOMC and chairman Powell on Wednesday, the extremely tough talk about curtailing inflation, the outlook now is another 125 bps from the Fed this year. Another 75 bps in Nov and 50 bps more in Dec. The economy will suffer, a recession is more plausible now than on last Tuesday. The European Central Bank, Bank of Japan and Bank of England all set to move rates higher over the next month.

Yesterday for the first time in 24 years the Bank of Japan intervened in the currency markets buying yen. The yen has weakened significantly over the last few months as have most currencies against the dollar. Treasury commented today that it understood why the Bank of Japan had to step in to slow the yen’s decline.

Overnight the 10 yr. note increased from 3.715 yesterday to 3.83%, by 9 am this morning back to unchanged from yesterday. MBS prices started the day -45 bps, by 9 am +13 bps from yesterday. Markets in the very near term were extremely over-extended; without the global increases yesterday rate markets would have held Wednesday’s levels.

At 9:30 am the DJIA opened -331, NASDAQ -134, S&P -47. 10 yr. at 9:30 am 3.71% unchanged. FNMA 5.5 30 yr. coupon -3 bps and -62 bp from 9:30 am yesterday.

At 9:45 am the Sept PMI FLASH composite index was expected at 47.0 as released 49.3; the manufacturing index 51.8 on forecasts of 51.3, the service sector index was expected at 45.0, as reported 49.2.

More global data:

Australia's flash September Manufacturing PMI ticked up to 53.9 from 53.8 and flash Services PMI rose to 50.4 from 50.2.

New Zealand's Q3 Westpac Consumer Sentiment rose to 87.6 from 78.7.

Eurozone's flash September Manufacturing PMI fell to 48.5 from 49.6 (expected 48.7) and flash Services PMI fell to 48.9 from 49.8 (expected 49.0).

Germany's flash September Manufacturing PMI fell to 48.3 from 49.1, as expected, and flash Services PMI fell to 45.4 from 47.7 (expected 47.2).

U.K.'s flash September Manufacturing PMI rose to 48.5 from 47.3 (expected 47.5) and flash Services PMI fell to 49.2 from 50.9 (expected 50.0). September GfK Consumer Confidence fell to -49 from -44 (expected -42) and September CBI Distributive Trades Survey fell to -20 from 37 (expected 10).

France's flash September Manufacturing PMI fell to 47.8 from 50.6 (expected 49.8) and flash Services PMI rose to 53.0 from 51.2 (expected 50.5).

Crude oil falling as the economic outlook is worsening. Gold continues to decline as the dollar remains strong. On gold, if you have seen all the ads and commercials from gold sellers referring to it as an inflation hedge, while that has been true in past inflation spikes, the decline in gold is because of the dollar’s strength. Gold prices are set in dollar terms globally, strong dollar keeps gold from improving.

PRICES @ 10:00 AM

10 yr note: 3.71% unch

5 yr note: 3.96% +3 bp

2 Yr note: 4.15% +3 bp

30 yr bond: 3.63% -1 bp

Libor Rates: 1 mo 3.084%; 3 mo 3.641%; 6 mo 4.183%; 1 yr 4.800% (9/22/22)

30 yr FNMA 5.0: 98.16 bp+3 bp (-61 bp from 9:30 am yesterday)

30 yr FNMA 5.5: 98.88 bp -3 bp (-62 bp from 9:30 am yesterday)

30 yr GNMA 5.0: 98.47 -14 bp (-75 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1184 +$0.0403

Dollar/Yen: 142.98 +0.62 yen

Dollar/Euro: $0.9748 -$0.0090

Dollar Index: 112.22 +0.87

Gold: $1656.70 -$24.70

Bitcoin: 18,946 -306

Crude Oil: $79.30 -$4.19

DJIA: 29,686 -391

NASDAQ: 10,871 -196

S&P 500: 3695 -62

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 23rd, 2022 8:57 AM

Daily Market Analysis

Yesterday’s FOMC and Powell’s press conference reassured markets that the Fed will continue to increase the FF rate through the rest of this year (two more FOMC meetings). Looks like another 125 bps is planned given the current economic outlook and the Fed’s quarterly projections. Powell didn’t mix any words yesterday, continuing his strong stance that surfaced at Jackson Hole at the end of August. The Fed and other central banks, as well as investors completely misjudged inflation a year ago believing it was “transitory”, Powell soft peddled the concern. As is clear now Powell has taken a very tough stand, even stronger than many were expecting just a month ago.

The Bank of England met today and as expected increased UK rate by 50 bps, the second time it did. It was the seventh increase in a row, with officials voting to tighten policy at every meeting since December. According to the news there were three members of the policy group that were wanting an event stronger increase. The increase takes rates up to 2.25%. The committee said it would “respond forcefully as necessary” if price pressures look more persistent, reinforcing the view that tightening is far from done.

The dollar has been climbing for months with no currency interventions by governments to stem the increase. Today Japan’s Ministry of Finance intervened to halt a slide of the yen against the dollar, the country’s top currency official Masato Kanda said. Whether there will be additional currency interventions remains to be seen, but in past interventions to thwart currency moves other countries have followed Japan. The last time Japan intervened was 24 years ago, yesterday the yen at 143 to the dollar, this morning at 141. The price of gold improved on the intervention.

At 8:30 am ET weekly jobless claims 213K +5K.

At 9:30 am the DJIA opened +23, NASDAQ -26, S&P -2. 10 yr. note at 9:30 am +11 bps to 3.64%. FNMA 5.5 30 yr. coupon -39 bps from yesterday’s close and -44 bps from 9:30 am yesterday; FNMA 5.0 coupon -39 bps from yesterday and -45 bps from 9:30 am yesterday.

PRICES @ 10:00 AM

10 yr note: 3.66% +13 bp

5 yr note: 3.89% +12 bp

2 Yr note: 4.13% +8 bp

30 yr bond: 3.62% +12 bp

Libor Rates: 1 mo 3.059%; 3 mo 3.604%; 6 mo 4.124%; 1 yr 4.682% (9/21/22)

30 yr FNMA 5.0: 98.77 -48 bp (-39 bp from 9:30 am yesterday)

30 yr FNMA 5.5: 100.50 -39 bp (-44 bp from 9:30 am yesterday)

30 yr GNMA 5.0: 99.22 -45 bp (-58 bp from 9:30 am yesterday)

Dollar/Yuan: $7.0655 +$0.0165

Dollar/Yen: 141.90 -2.18 yen

Dollar/Euro: $0.9848 +$0.0009

Dollar Index: 111.00 +36

Gold: $684.70 +$10.00

Bitcoin: 19,012 +94

Crude Oil: $85.75 +$2.81

DJIA: 30,0037 -137

NASDAQ: 11,099 -121

S&P 500: 3760 -30

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 22nd, 2022 11:12 AM

Daily Market Analysis

Traders and investors prepare for the FOMC at 2 pm ET this afternoon. Stock indexes opened better. Also, this afternoon the Fed will release its quarter forecasts for employment, inflation, and economic outlooks. “Close shorts on equities and bonds,” said Stephen Miller, a four-decade market veteran and investment consultant at GSFM, a unit of Canada’s CI Financial Corp. in Sydney. “I’d be closing long dollar positions too -- the next 24 hours are so uncertain when the market has already worked itself into such a pessimistic lather into the meeting.”

Not only the Fed hangs over markets, tomorrow the ECB and the BofJ are scheduled to meet. Over the last two months all global markets have traded in technically over-extended conditions. It isn’t unusual after the rent declines in most assets for traders and big investors to get nervous, especially this go round as global central banks have really ratcheted up their worries about inflation. Uncertainty across virtually every asset class: expected swings in US stocks are near levels last seen in mid-July, while those on Treasuries have jumped to a one-month high. Overnight implied volatility has also surged across all major currency pairs, underscoring uncertainty over how foreign-exchange markets will react to the Fed’s decision. Even though Powell, the ECB and BofJ have been specific about their intent, some optimism is still alive that central banks won’t let global economies fall deep into recession; wishful thinking. Powell’s recent reference to Paul Volker’s inflation attack and the resultant deep recession kind of implies he will take the same path. The Fed wants unemployment to increase to 5.0%, inflation back to 2.0%.

This morning MBA mortgage applications, after weeks of declines last week applications increased 3.8%, purchase apps +1.0%, re-finance apps jumped 10.4%.

At 9:30 am the DJIA opened +170, NASDAQ +45, S&P +23. 10 yr. at 9:30 am 3.55% -1 bp. FNMA 5.0 30 yr. coupon +13 bps and +33 bps from 9:30 am yesterday; the 5.5 coupon +11 bps and +39 bp from 9:30 am yesterday.

At 10 am August existing home sales 4.800 mil against forecasts od 4.700 mil, m/m -0.4% from July and -19.9% yr./yr.

PRICES @ 10:00 AM

10 yr note: 3.54% -2 bp

5 yr note: 3.74% -1 bp

2 Yr note: 3.98% +1 bp

30 yr bond: 3.55% -3 bp

Libor Rates: 1 mo 5.051%; 3 mo 3.602%; 6 mo 4.175%; 4.699% (9/20/22)

30 yr FNMA 5.0: @9:30 am 99.33 +11 bp (+33 bp from 9:30 am yesterday)

30 yr FNMA 5.5: @9:30 am 101.02 +11 bp (+39 bp from 9:30 am yesterday)

30 yr GNMA 5.0: @9:30 am 99.80 +11 bp (+30 bp from 9:30 am yesterday)

Dollar/Yuan: $7.0511 +$0.0328

Dollar/Yen: 144.00 +0.27 yen

Dollar/Euro: $0.9905 -$0.0065

Dollar Index: 110.76 +0.55

Gold: $1681.70 +$10.60

Bitcoin: 19,318 +348

Crude Oil: $84.91 +$0.46

DJIA: 30,897 +173

NASDAQ: 11,467 +42

S&P 500: 3880 +24

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 21st, 2022 8:48 AM

Daily Market Analysis

Stock indexes lower in pre-opening futures markets. Tomorrow is the day for the FOMC and Jerome Powell’s press conference. It isn’t about the highly anticipated rate increase of 75 bps, that is already well baked in the cake. What investors and traders are focusing on is what can be gleaned from the policy statement and what Powell must answer at his presser. Beside the policy statement the Fed will release its projections on inflation, employment, and growth. The coming 75 bp increase will be the third 75 bump. The Fed is increasingly doubting old estimates of the relationship between unemployment and inflation, which may be part of the reason why they’re now inclined to aim for a bigger slowdown in economic activity. “The higher trajectory for interest rates is going to have a bigger impact, certainly, on unemployment. We see the unemployment rate coming up closer to 4.5% in the Fed’s new forecast,” said Brett Ryan, senior US economist at Deutsche Bank AG in New York. “They still are going to peddle the ‘soft landing’ scenario, but it’s going to imply a high risk of recession within that.”

Powell has been echoing Paul Volker’s moves back in the 80s to crush inflation, which he did at the expense of the economy that dove in recession. Most in markets today were not at the table in the mid-eighties, just relying on what history recorded. Let me say it was not an easy experience but had to be done; inflation had been excessive in the mid-70s and was getting worse before Volker attacked with huge rate increases, just what Powell and the present Fed is looking at now. A global recession is a high probability now.

At 9:30 am ET the DJIA opened -272, NASDAQ -90, S&P -37. 10 yr. at 9:30 am, a new high at 3.58% +9 bps. FNMA 5.5 30 yr. coupon -27 bps and +4 bp from 9:30 am yesterday, the 5.0 coupon -34 bps and -12 bp from 9:30 am yesterday.

At 8:30 am August housing starts stronger than thought, 1.575 mil, permits weaker at 1.517 mil.

The dollar continues to increase today, just can’t stop with the US attacking inflation with very high comparative rates.

PRICES @ 10:00 AM

10 yr note: 3.58% +9 bp

5 yr note: 3.75% +6 bp

2 Yr note: 3.98% +5 bp

30 yr bond: 3.58% +7 bp

Libor Rates: 1 mo 3.014%; 3 mo 3.565%; 6 mo 4.123%; 1 yr 4.572% (9/19/22)

30 yr FNMA 5.0: @9:30 am 99.02 -34 bp (-14 bp from 9:30 am yesterday)

30 yr FNMA 5.5: @9:30 am 100.67 -27 bp (+4 bp from 9:30 am yesterday)

30 yr GNMA 5.0 : @9:30 am 99.50 -34 bp (-21 bp from 9:30 am yesterday)

Dollar/Yuan: $7.00181 +$0.0114

Dollar/Yen: 143.80 +0.60 yen

Dollar/Euro: $0.9974 -$0.0050

Dollar Index: 110.20 +0.46

Gold: $1670.30 -$7.90

Bitcoin: 18,840 -679

Crude Oil: $84.60 -$1.13 (strong dollar driving price lower)

DJIA: 30,645 -374

NASDAQ: 11,437 --98

S&P 500: 3854 -46

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 20th, 2022 9:10 AM

Rates At a Glance
Mortgage Rates
Currently Trending
7 Day Mortgage
Rate Forecast
This Week's
Potential Volatility

Higher

Higher

High
(by Sigma Research)
Real Estate Report

Take a breath. Price growth is slowing at last

Throwing yourself into a pool of homebuyers today is not the most enticing prospect. Simultaneously squeezed by rising mortgage rates and ever-higher home prices is not an envious position in which to find yourself.

According to Realtor’s Judy Dutton, however, at long last some relief seems to be on the horizon. Real estate stats for the week ending Sept. 10 indicate that the runaway real estate inflation that homebuyers have been struggling to keep up with is slowing down—if just by a bit. Use the comparison of a teenager whose growth spurt is almost over. While he or she is still growing, the rate of growth has slowed.

“Although home prices continue to register double-digit growth relative to one year ago, the rate took a notable step back this week to the lowest pace since January,” notes Realtor.com Chief Economist Danielle Hale. Meanwhile, Dutton reveals the latest figures and what they mean for both homebuyers and sellers so that all can stay on top of today’s fast-changing market. She reports that in August, home prices hovered at a national median of $435,000 and prices are still rising—by 11.7% for the week ending Sept. 10 compared with this same week last year.

Okay. So it’s the 39th straight week of double-digit growth. But the glimmer of good news for buyers is that this week’s rate marks the lowest level seen since January. And that’s meaningful. Price growth in previous weeks clocked in even higher—in the 15%–16% range throughout July, followed by the 13%–15% range in August. In this context, this latest week’s 11.7% price growth doesn’t seem so bad. Add to that the fact that summer’s home-buying frenzy is over and it points to real estate prices falling along with seasonal temperatures.

Interestingly enough, the numbers suggest that the best time of year to buy a house is the last week of September, when prices are slated to be $20,000 lower than June’s all-time high of $450,000. “In other words, home shoppers who want to double down on their efforts right when the cards are heavily stacked in their favor had best hit those open houses hard right now before this prime window of opportunity closes,” says Dutton.

You’d hope for more inventory to hit the market, but don’t hold your breath. Dutton says for the week ending Sept. 10, the number of new home sellers putting their properties on the market dropped by 13% compared with this same week last year —the 10th straight week of year-over-year declines, and a double-digit drop at that. Hale admits, “Sellers are less optimistic about conditions compared to a year ago, which is a likely factor behind the scarcer new listings trend,” says Hale.

Everything can have a silver lining in the big scheme of things, however. “While the number of newly listed options was smaller, today’s shoppers have more than five homes to consider for every four they had at this time a year ago,” Hale explains. And with listings lingering on the market nearly a week longer than a year ago, you have more time to decide.

The pandemic also changed the breadth of buyer-desired geographics, however. More shoppers than ever before are willing to look across state lines for a home and the more affordable areas are likely to see ongoing demand.

Realtor, TBWS

This Week's Mortgage Rate Summary

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market worsened by -104 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Central Banks and 3) Treasury Sales

1) The Fed: Long-awaited FOMC meeting is this week and on Wednesday we will get a lot out of the Fed including:

  • An Interest Rate Hike in the 50BPS to 100BPS range with most of the market pricing in a 75BPS hike.
  • The release of their Economic Projections (which is used to create the much maligned Dot Plot Chart) which will communicate the Fed's expected path of inflation, growth and rates.
  • A live presser with Fed Chair Powell.

2) Central Banks: We get key interest rate decisions out of the Bank of Japan, Bank of England, Swiss National Bank and the Risksbank (Sweden).

3) Treasury Sales: We have an important 20 year Treasury bond auction on Tuesday.

This Week's Potential Volatility: High

This morning markets are already under pressure. Volatility is always high around FOMC.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 19th, 2022 5:49 PM

Daily Market Analysis

The 10 yr. broke above its technical resistance at 3.47%, at 8 am ET 3.50%; MBA prices at 8 am -37 bps from Friday. US stock indexes under pressure, at 8 am DJIA -247, NASNAQ -103, S&P -32. The 10-year yield jumped as much as 6.6 basis points to 3.516%, breaking above a psychological level that held in mid-June. Selling pressure was focused more on the policy sensitive two-year note, with the benchmark rising as much as 7.5 basis points to 3.94%, marking a fresh high since October 2007. The UK markets were closed today to honor Queen Elizabeth.

The dollar can’t be stopped and unless it does its strength will add the woes affecting the world as the dollar is the reserve currency and most international transactions are settled in US dollars; one easily observed impact can be seen in gold’s prices continuing to decline. In times past when inflation began to increase gold went up with it; not now though. Dollar stronger again today, gold down another $10.00 at 8:30 am. Crude oil down again this morning with increasing concerns the global economy is headed toward world-wide recession and again the strong dollar.

Inflation so far has not only not subsided but is increasing around the world. Central banks so far haven’t succeeded in lowering in. The Fed on Wednesday will increase the FF rate by 75 bps, the question is, what will the FOMC policy say about the future of even higher rates? What happens if the Fed does go 100 bps? The 10 yr. will increase 60 to 70 more basis points, the stock market, already declining will crater, and recession won’t be debated anymore. Powell and the Fed should stay at 75 and see what the current interest rate increases have done to the economic outlook. As usual, between the policy statement and Powell’ press conference there will numerous interpretations of Fedspeak that will carry on until late October before the November FOMC meeting.

Wall Street firms beginning to warn of Q3 earnings declines. Both Morgan Stanley’s Michael J. Wilson and Goldman Sachs Group Inc.’s David J. Kostin said headwinds to profitability are building, highlighting tighter monetary policy and pressure on company margins as key concerns.

At 9:30 am the DJIA opened -250, NASDAQ -102, S&P -34. 10 yr. at 9:30 am 3.49% +4 bp. FNMA 5.5 30 yr. coupon at 9:30 am -52 bps from Friday and -42 bp from 9:30 am Friday. (Its price at 10 am -33 bps)

At 10 am Sept NAHB housing market index, expected at 48.0 from 49.0 in August, the index dropped to 46.

Stocks at 10 am improving from the 9:30 am open, MBS prices also better than at 9:30 am. FOMC on Wednesday; US financial markets may hold steady until then. What isn’t likely though is interest rates will decline or stocks launch into strong gains.

PRICES @ 10:00 AM

10 yr note: 3.49% +4 bp

5 yr note: 3.71% +7 bp

2 Yr note: 3.96% +9 bp

30 yr bond: 3.52% unch

Libor Rates: 1 mo 3.019%; 3 mo 565%; 6 mo 4.123%; 1 yr 4.672% (9/16/22)

30 yr FNMA 5.0: @9:30 am 99.16 -45 bp (-32 bp from 9:30 am Friday)

30 yr FNMA 5.5: @9:30 am 100.63 -52 bp (-42 bp from 9:30 am Friday)

30 yr GNMA 5.0: @9:30 am 99.81 -44 bp (-30 bp from 9:30 am Friday)

Dollar/Yuan: $7.0099 -$0.0261

Dollar/Yen: 143.48 +0.56 yen

Dollar/Euro: $0.9987 -$0.0029

Dollar Index: 109.98 +0.22

Gold: $1676.40 -$7.10

Bitcoin: 19,128 -592

Crude Oil: $83.46 -$1.65

DJIA: 30,730 -92

NASDAQ: 11,408 -40

S&P 500: 3858 -15

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 19th, 2022 10:08 AM

Daily Market Analysis

Last night though the 10 briefly exceeded the resistance level at 3.47% increasing to 3.48% then slipped back to unchanged from yesterday at 3.45% at 8:30 am ET this morning. No end in sight for the stock indexes, in futures trading at 8:30 am the DJIA -268, NASDAQ -138, S&P -38. MBS prices at 8:30 am down 14 bps from yesterday’s selling.

Another big bank adding its view that there is more weakness to come in the equity markets. US stocks haven’t seen the worst of this year’s declines yet against the backdrop of scorching inflation and a hawkish Federal Reserve, according to Bank of America Corp. strategists. The “inflation shock ain’t over” and an earnings recession will likely drive stocks to new lows, strategist Michael Hartnett said in a note. Although the bank said US equity funds posted their biggest inflows in more than a month in the week to Sept. 14, stock markets have been under pressure again since Tuesday after a hotter-than-expected consumer price report fueled the S&P 500’s biggest one-day drop since June 2020. His analysis of past bear markets also shows average peak-to-trough declines of about 37% for the S&P 500 over 289 days. That suggests the current bear market, which the benchmark index confirmed in June, will end in October with the gauge at 3,020 points -- 23% below current levels, the strategist said. His comments echo Goldman Sachs, Morgan Stanley, Société Générale SA, and Sanford C. Bernstein. JP Morgan Chase though still hanging on to a soft landing.

Next Wednesday the FOMC will increase the FF rate, the question is, will the Fed move 100 bps or 75 bps? Of course, no one knows, but the betting has increased that a 100 bp increase is a growing possibility. We still hold that the Fed will do just 75 bps, think the Fed will want to see how the recent increases will filter into and through the economy and what impact on inflation has had after the recent increases. In the meantime, until next Wednesday afternoon interest rate markets shouldn’t change much in either direction.

The FOMC will raise rates by 75 basis points for a third consecutive meeting. A month ago, the view was that in 2023 the Fed would begin lowering rates after inflation was corralled, now Fed forecasts released at the meeting are expected to show the upper bound of the range at 4% by year-end and edging higher next year, before cuts in 2024 take it back to 3.6%. A big step up from Fed forecasts in June, reflecting a tougher fight against inflation after August core consumer-price growth came in hotter than expected. The survey of 45 economists was conducted Sept. 9-14.

At 9:30 am the DJIA opened -367, NASDAQ -148, S&P -42. 10 yr. note 3.48% +3 bps. FNMA 5.00 30 yr. coupon and the 5.5 coupon at 9:30 am both down 16 bps from yesterday; from 9:30 am yesterday the 5.0 coupon down -27 bps, the 5.5 coupon -18 bps.

At 10 am the mid-month U. of Michigan consumer sentiment index was expected at 59.9 from 58.2 in August, as released the index 59.5

No stopping the strength of the US dollar; stronger again today, an almost daily upward trajectory over the last six months.

PRICES @ 10:00 AM

10 yr note: 3.47% +2 bp

5 yr note: 3.67% unch

2 Yr note: 3.91% +4 bp

30 yr bond: 3.51% +4 bp

Libor Rates: 1 mo 2.993%; 3 mo 3.527%; 6 mo 4.063% 1 yr 4.621% (9/15/22)

30 yr FNMA 5.0: @9:30 am 99.48 -16 bp (-27 bps from 9:30 am yesterday)

30 yr FNMA 5.5: @9:30 am 101.05 -16 bp (-18 bp from 9:03 am yesterday)

30 yr GNMA 5.0 : @9:30 am 100.11 -12 bp (-25 bp from 9:30 am yesterday)

Dollar/Yuan: $7.0132 +$0.0187

Dollar/Yen: 143.16 -0.34 yen

Dollar/Euro: $0.9967 -$0.0032

Dollar Index: 110.07 +0.33

Gold: $1666.70 -$10.60

Bitcoin: 19,670 -166

Crude Oil: $85.30 +$0.20

DJIA: 30,645 -316

NASDAQ: 11,366 -187

S&P 500: 3853 -48

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on September 16th, 2022 10:40 AM

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