April 3rd, 2023 10:10 AM by Richard Sardella MLO.100007700/NMLS 233568
Q2 begins. The news overnight, OPEC will cut 1 million barrels a day has rocked the energy markets, crude at 8:30 am ET +$4.60 to $80.30. The reaction in the rate markets, the 10 year note increased 5 bps to 3.52%, MBS prices in early trading 22 bps lower than Friday’s close. Initial talk from energy market traders, crude could hit $100.00 by the end of this year. Until now OPEC+ was assuring it would hold output steady. The immediate outlook is an increase in inflation that the Fed will now have to work into its decisions. The Saudis will cut 500K, half of the total.
The surprise oil cuts are adding another layer to the cake about the potential increase in inflation. Recently inflation has continued to work lower month by month, now the question takes on another twist. If $100.00 a barrel occurs all prices will increase, whether at the pump or at the grocery store. Will central banks be dragged into more rate increases? Until yesterday the debate between 25 bps and no increase at the may meeting was evenly balanced, half saying yes, the other half, no. One additional consideration tossed into the mix. The higher energy prices will be a drag on economies, central banks must balance higher rates to squash inflation or standing down to keep the economies moving forward.
This is employment week, manufacturing, and service sector indexes.
At 9:30 am the DJIA opened +113, NASDAQ -76, S&P -5. 10 year 3.50% +3 bps. FNMA 5.5 30 year coupon -17 bps and +7 bp from 9:30 am Friday; the 6.0 coupon -9 bps and +21 bps from 9:30 am Friday.
At 9:45 am PMI manufacturing in March 49.2 against 49.3 forecasts.
At 10 am March ISM manufacturing index expected 47.5, as reported the index dropped to 46.3.
PRICES @ 10:00 AM
10 year note: 3.53% -2 bp
5 year note: 3.65% -3 bp
2 year note: 4.09% -5 bp
30 year bond: 3.71% -3 bp
Libor Rates: 1 month 4.848%; 3 month 5.177%; 6 month 5.272%; 1 year 5.231% (3/30/23)
30 year FNMA 6.0: @9:30 am 101.73 -17 bp (-7 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 100.77 -6 bp (+8 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.91 -5 bp (+3 bp from 9:30 am yesterday)
Dollar/Yuan: $6.8692 -$0.0026
Dollar/Yen: 133.02 +0.30 yen
Dollar/Euro: $1.0893 -$0.0010
Dollar Index: 102.31 +0.16
Gold: $1997.60 -$0.-$0.30
Bitcoin: 28,397 +243
Crude Oil: $75.27 +$0.90
DJIA: 33,028 +169
NASDAQ: 12,078 +65
S&P 500: 4071 +20
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.