CHM Blog

The 10 year note tested and held 3.40% yesterday, once again failing to break through. This morning at 8:30 am ET 3.41% +1 bp. MBS prices at 8:30 am -6 bps from yesterday’s 27 bps improvement.

At 8:30 am March durable goods orders, the advance look, expected +0.9% blew the doors off at +3.2%, mostly on aircraft orders. Excluding transportation orders expected -0.2% increased +0.3%, core capital goods thought to be +0.25 declined 0.4%. No reaction to the strong headline. The key takeaway from the report, though, is that nondefense capital goods orders excluding aircraft -- a proxy for business spending -- declined 0.4% in March following a 0.7% decline in February. The March US advance trade deficit was expected at -$90.0B lessened to -$84.6B; imports -1.0%, exports +2.9%.

A few weeks after SVB and Signature Bank failed markets settled down with the view that worst for banks had ended. That view was challenged when Republic Bank resurrected the concern three days ago. Republic’s stock down almost 50% and worries increased that a serious credit crunch is increasingly likely as the economic outlook worsens, its deposits down 48%. Banks may add to the economic slide as they restrict credit and increase costs. Small businesses say it hasn’t been this difficult to borrow in a decade; the amount of corporate debt trading at distressed levels has surged about 300% over the past year, effectively locking a growing swath of businesses out of financial markets; bond and loan defaults have ticked up; and the Federal Reserve says banks have tightened lending standards. Corporate bankruptcies are on the rise, too, particularly in the construction and retail industries.

At 9:30 am the DJIA opened +79, NASDAQ +111, S&P +11. 10 year 3.39% -1 bp. FNMA 6.0 30 year coupon at 9:30 am -9 bps and +2 bps from 9:30 am yesterday; the 5.5 coupon -6 bps and unchanged from 9:30 am yesterday.

Short term the 10 still has a brick wall at 3.40%. The Fed will increase the FF rate by 25 bps next Wednesday, the question remains, what will the Fed do going forward? Most likely the FOMC statement and Powell will hint that a pause is at hand. Many analysts now speculating that later this year rates will decline. On a recession, from what we glean from following numerous money managers, analysts, and traders the chance of a recession is increasing. The prop now is the consumer, still optimistic, still spending, but using credit cards more frequently. With credit rates on cards climbing that will eventually take its toll.

PRICES @ 10:00 AM

10 year note: 3.39% -1 bp

5 year note: 3.44% -1 bp

2 year note: 3.88% -3 bp

30 year bond: 3.64% -2 bp

Libor Rates: 1 month 5.018%; 3 month 5.292%; 6 month 5.406%; 1 year 5.373% (4/25/23)

30 year FNMA 6.0: @9:30 am 101.91 -11 bp (+2 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 100.80 -8 bp (unch from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.67 -5 bp (+3 bp from 9:30 am yesterday)

Dollar/Yuan: $6.9237 -$0.0090

Dollar/Yen: 133.16 -0.56 yen

Dollar/Euro: $1.1086 +$0.0110

Dollar Index: 101.09 -0.77

Gold: $2014.30 +$9.80

Bitcoin: 29,785 +1794

Crude Oil: $76.08 -$0.99

DJIA: 33,538 +5

NASDAQ: 11,912 +113

S&P 500: 4078 +6

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.