CHM Blog

Is the glass have full or half empty? July CPI data this morning was mostly in line with expectations, except one element. Year/year CPI thought to be 3.3% was lower than 3.3% (3.2%) forecasts but compared to June CPI increased from 3.0%. Month/month CPI increased 0.2% as expected. Excluding food and energy month/month CPI expected +0.2% was right on, year/year core 4.7% against 4.8% expected and down from 4.8% in June. The initial reaction muted with the 10 year trading at 4.00%. That overall year/year CPI increased from June was the first time CPI has increased in over a year; but core inflation (ex-food and energy) the focus for J Powell slowed a tick to 4.7% from 4.8%. That’s the lowest rate in almost two years.

The inflation battle isn’t over, looking out further the level of inflation may not be easy to achieve, recent gas prices are on the rise, rent and home prices remain high, although rents are edging lower. Crude oil over the last six weeks has increased from $66.00 to $83.93 yesterday. The core CPI could encourage the Fed to hold its benchmark interest rate steady at its September policy meeting. The new numbers lower the three-month annualized rate of core inflation to 3.1%, the lowest such reading in nearly two years.

Taking the back seat this morning, weekly jobless claims thought to be 229K from 227K the previous week increased to 248K, +21K. While initial claims are still running well below recession-like readings, they moved in a direction in the latest week to corroborate the thinking that there is some softening in the labor market, which is what the Fed expects to see. These days markets will hang on any news, and interpretations vary. It is a truism that statistics can be taken in anyway that suits one’s leaning.

At 9:30 am the DJIA opened +188, NASDAQ +94, S&P +23. 10 year 4.00% unchanged from yesterday. FNMA 6.0 30 year coupon at 9:30 am +17 bps from yesterday’s close and +26 bps from 9:30 am yesterday.

Nothing left on the calendar today except Treasury will auction $23B of new 30s, Yesterday’s 10 year auction met with good demand as did the 3 year note auction on Tuesday. Tomorrow July producer price index, month/month +0.2% from +0.1%, year/year +0.7% from 0.1%. Core PPI month/month +0.2% from +0.1%, year/year 2.3% from 2.4%. Also, tomorrow the mid-month U. of Michigan consumer sentiment index is thought to be 71.3 from 71.6 in June.

PRICES @ 10:00 AM

10 year note: 4.00% unch

5 year note: 4.10% -4 bp

2 year note: 4.78% -2 bp

30 year bond: 4.18% unch

30 year FNMA 6.0: @9:30 am 100.65 +17 bp (+21 bps from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.34 +26 bp (+24 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.33 +11 bp (+35 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2109 +$0.0016

Dollar/Yen: 144.20 +0.47 yen

Dollar/Euro: $1.1029 +$0.0055

Dollar Index: 102.15 -0.34

Gold: $1956.60 +$6.00

Bitcoin: 29,649 +146

Crude Oil: $83.81 -$0.57

DJIA: 35,573 +450

NASDAQ: 13,942 +220

S&P 500: 4525 +58

SOFR Data 08/10: 30-DAY AVERAGE(%): 5.18048, 90-DAY AVERAGE(%): 5.12662, 180-DAY AVERAGE(%): 4.96644, INDEX: 1.09165458

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.