CHM Blog

Yesterday another day of trading volatility, the 10 yr. note yield fell to 2.77% -15 bps about 12 pm ET yesterday but ended the US session at 2.83% -7 bps. MBS prices swung around as treasuries gave up the strong gains. Volatility also in equity markets yesterday, in the morning the key indexes were under pressure, the DJIA down 200 points, by mid-day buying surfaced and at the end of the day the three indexes were in positive territory (DJIA +238, NASDAQ +166, S&P +24).

This morning the 10 yr. note began at 2.76%, yesterday’s low, down 7 bps from yesterday, MBS prices +48 bps from yesterday. At 8:30 am March durable goods orders, expected +1.0% increased 0.8%; Feb orders revised better, from -2.2% to -1.7%. Excluding transportation orders the estimates were +0.5%, as reported +1.1%; core capital goods orders increased 1.0% against estimates of +0.5%.

The decline in the 10 and price improvements in MBSs squaring investors’ excessive bearishness that was dominate since the beginning of April. About all Fed officials including Jerome Powell made it abundantly clear the Fed would increase the FF rate by 50 bps next week. The bearish talk increased, that the Fed would have to increase the FF rate 200 bps this year to cool inflation, yesterday and so far this morning some of that concern has ebbed, as the calendar moves toward the FOMC some of the excessive bearishness is relaxing, the huge bearish bets have lessened; now it’s wait for what next week will reveal at the FOMC and Powell’s press conference. Always easy to accept whatever momentary belief until we get closer to the reality that defined the thought. The nice improvements are not indicative of a change in sentiment, trading yesterday and so far this morning are not to be viewed as any change in the underlying reasons that interest rates will increase. Volatility continues; at 9:30 am MBS prices was up 48 bps, at 9:45 am +30 bps.

At 9 am Feb Case/Shiller and FHFA reported their housing price indexes; Case/Shiller expected +1.5% increased 2.4%, yr./yr. 20.2%; FHFA +2.1%, yr./yr. +19.5%

At 9:30 am the DJIA opened -253, NASDAQ -94, S&P -26.10 yr. at 9:30 2.78% -8 bps. FNMA 4.5 30 yr. coupon at 9:30 am +48 bps from yesterday’s close and 39 bps from 9:30 am yesterday.

At 10 am March new home sales expected to be unchanged from Feb at 772K, as reported sales -8.6% to 763K, revision in Feb to 835K . Also, at 10 am April consumer confidence index thought to be at 108.05 from 107.2, as reported 107.03. We will have the complete details this afternoon at the 4:30 pm report.

At 1 pm Treasury will auction 2 yr. notes, tomorrow 5 yr. notes and Thursday 7 yr. notes.

PRICES @ 10:00 AM

S&P 500: 4256 -40

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.

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