April 20th, 2022 9:11 AM by Richard Sardella MLO.100007700/NMLS 233568
Yesterday at 4 pm ET the 10 was at 2.94%, late yesterday the yield increased another 3 bps to 2.97%. Early this morning back to 2.86%, at 9 am 2.88%. MBS prices opened better in line with the 10 yield decline. We noted yesterday that technically the 10 yr. was in very oversold conditions, at the beginning of the day we see the results. There wasn’t any direct news, just the pattern that occurs after a strong move higher traders see the same oversold indicators as we do. A couple of Fed officials yesterday confirmed what markets have anticipated, that the Fed will increase the FF rate by 0.50; James Bullard St. Louis Fed, even suggested a 75 bp increase, he leads the Fed comments with his concern that the Fed should act more aggressively, he believes the inflation rate will continue to increase. Meanwhile yesterday the stock indexes rallied, the DJIA +500 points.
Mortgage applications fell last week according to MBA, a sixth straight week as mortgage rates climbed to a 12-year high, weighing on both home purchases and refinancing. Overall apps down 5.0%, purchase apps -3.0% and re-finance apps -8.0%.
Investors that buy 10 yr. notes can now expect to earn real returns on their money for the first time in more than two years. 10-year inflation-protected Treasuries (TIPS) rose to as high as three basis points since the pandemic and two years of losses if investing. Signaling the income on nominal 10-year notes is expected by investors to exceed average inflation over the coming decade. Swaps traders are pricing in about 140 basis points of hikes over the next three Fed meetings, signaling they expect at least two 50 basis point moves. The last time the U.S. central bank carried out back-to-back increases of 50 basis points or more was in August 1984, Paul Volker aggressively raised the FF rate to quell inflation; one year later the stock market and economy fell hard; Oct 19th, 1985, in a final panic the DJIA lost half its value (Black Monday).
At 9:30 am the DJIA opened +228, NASDAQ +45, S&P +22. 10 yr. 2.90% -4 bps. FNMA 4.5 coupon at 9:30 am +14 bps from yesterday and +11 bps from 9:30 am yesterday.
At 10 am March existing home sales, expected at 5.860 mil from Feb’s 6.020 mil: as reported sales at 5.77 mil, down 2.7% and yr./yr. -4.5%.
At 10:30 am Mary Daly, San Francisco Fed; at 11:30 am Charles Evans, Chicago Fed. These are the last of regional Fed speeches until after the FOMC meeting on May 4th.
At 1 pm Treasury will auction $16B of 20 yr. bonds.
At 2 pm the Fed’s Beige Book.
PRICES @ 10:00 AM
10 yr note: 2.88% -6 bp
5 yr note: 2.88% -4 bp
2 Yr note: 2.59% -1 bp
30 yr bond: 2.93% -7 bp
Libor Rates: 1 mo 0.625%; 3 mo 1.098%; 6 mo 1.607%; 1 yr 2.303% (4/19/22)
30 yr FNMA 4.0: 99.81 +25 bp (+6 bp from 9:30 am yesterday)
30 yr FNMA 4.5: 101.78 +14 bp ( +11 bp from 9:30 am yesterday)
30 yr GNMA 4.0: 100.34 +22 bp (-32 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4176 +$0.0241
Dollar/Yen: 127.96 -0.94 yen
Dollar/Euro: $1.0834 +$0.0046
Dollar Index: 100.46 -0.50
Gold: $1950.60 -$8.40
Bitcoin: 41,690 +390
Crude Oil: $103.48 +$0.92
DJIA: 35,0091 +181
NASDAQ: 13,500 –118
S&P 500: 4491 -2
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.