April 25th, 2022 9:02 AM by Richard Sardella MLO.100007700/NMLS 233568
This week has a lot on the calendar, the most critical hits on Friday with the personal consumption expenditures (PCE), the Feds favorite inflation measurement. The current consensus is PCE prices increased to 0.9% from 0.6% in Feb; yr./yr. +6.8% from 6.4% in Feb.; the core excluding food and energy though is expected to slip a little, from 0.4% in Feb to +0.3%; yr./yr. from 5.4% to 5.3% in March.
At 9:30 am ET the DJJIA opened -200 continuing the strong sell last Friday when the index fell 981 points, NASDAQ -88, S&P -35. The 10 yr. at 2.81% -11 bp, FNMA 4.5 30 yr. coupon +33 bp (+47 bp from 9:30 am Friday).
The rather surprising decline in rates this morning driven primarily by the rapidly increasing outlook that the economy is headed for contraction. According to the news retail investors are bailing as interest rates increase and inflation climbs. Debate about whether the US will recess continues with a 50/50 divide for a recession, using the historical definition of a recession it is a close call; a recession is considered when there are 2 consecutive of declining GDP growth, arguing against recession has some legs at the moment, two quarters of increasing economic weakness may happen but traders won’t get too worked up this early in the process to determine a recession.
China’s economy is weakening quickly as the country locks down with the omicron virus spread, if it continues or worsens the inflation outlook will gain more momentum with slowing exports from China.
It is a nice way to start a Monday withmarkets better. Rate markets continue their day-to-day volatility. Maybe some safety movement with the bearish outlook for equities increasing. On Friday inflation will be reported, in the meantime it is not likely any substantial rate declines will occur. The 50 bp rate increase next week is completely discounted. A lot of speculation about continued 50 bp increases have gained momentum but with the FOMC and Powell next week (May 4th) getting closer those rock-hard forecasts will melt some as the week progresses; talk is cheap but reality trumps.
PRICES @ 10:00 AM
10 yr note: 2.79 %-11 bp
5 yr note: 2.80% -13 bp
2 Yr note: 2.57% -13 bp
30 yr bond: 2.87% -6 bp
Libor Rates: 1 mo 0.703%; 3 mo 1.213%; 6 mo 1.824%; 1 yr 2.606% (4/22/22)
30 yr FNMA 4.0: @9:30 99.72 +44 bp (+60 bp from 9:30 am Friday)
30 yr FNMA 4.5: @9:30 101.86 +31 bp (+47 bp from 9:30 am Friday)
30 yr GNMA 4.0: @9:30 100.16 +36 bp (+50 bp from 9:30 am Friday)
Dollar/Yuan: $6.5611 +$0.0594
Dollar/Yen: 127.71 -0.84 yen
Dollar/Euro: $1.0729 -$0.0072
Dollar Index: 101.62 +0.40
Gold: $1898.10 -$36..20
Bitcoin: 38,800 -739
Crude Oil: $96.99 -$5.08
DJIA: 33,456 -355
NASDAQ: 12,793 -46
S&P 500: 4228 -44
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.