CHM Blog

This morning weekly jobless claims, expected at 203K increased to 209K, +9K from the prior week. Continuing claims, which are seen as a gauge of outstanding unemployment in the US, declined by 22,000 to 1,777,000 in the earlier week. The data pointed to some resilience in the US labor market despite weaker signals from the latest BLS jobs report last Friday.

The main news this morning, July PPI, wholesale prices, following yesterday’s consumer prices were better than forecasts. Producer prices were unchanged in July, following a revised 0.1% fall in June and compared with market expectations of a 0.2% gain. A 0.2% increase in the index for services and a 2.2% advance in prices for construction offset a 0.7% decrease in the index for goods. Year/year, producer prices increased 4.7%, well below 5.5% in June and forecasts of 4.9%. Core producer prices rose 0.2%, below forecasts of 0.3% and the annual core rate came in at 4.2%, in line with expectations, slowing from the upwardly revised 0.4% increase in the previous month. This contrasted with market expectations of a 0.3% increase, reflecting a soft initial transmission of the rebound in energy prices to underlying sections of wholesale trade. From the previous year, core producer inflation rose by 4.2%. It’s the second consecutive month PPI final demand prices have not gone up.

The two 8:30 am ET releases supported MBS prices. The initial reaction dropped the 10 year note 4 bps from yesterday to 4.65%, yesterday’s low yield before closing at 4.69%. Initial prices for the 6.0 30 year coupon +17 bps.

The annual Jackson Hole Economic Forum is August 27th, two weeks from now; already analysts and economists are talking about it and what the Fed may say about interest rates and the potential of increasing the FF rate. Yesterday and this morning CPI and PPI both showing no big increases, last Friday July employment data substantially weaker than forecasts.

At 1 pm Treasury will auction $25B of 30 year bonds, the 10 year yesterday and the 3 year auction on Tuesday met with good demand.

PRICES @ 10:00 AM

10 year note: 4.63% -6 bp

5 year note: 4.30% -8 bp

2 year note: 4.14% -7 bp

30 year bond: 5.20% -6 bp

30 year FNMA 6.0: @9:30 am 101.55 +19 bp (+15 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.57 +27 bp (+17 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 102.07 +19 bp (+19 bp from 9:30 am yesterday)

Dollar/Yen: 159.26 -0.14 yen

Dollar/Euro: $1.1534 +$0.0007

Dollar Index: 99.89 -0.12

Gold: $4,434 -$34.50

Bitcoin: 63,654 +307

Crude Oil: $81.14 -$2.13

DJIA: 53,897 +127

NASDAQ: 26,819 +230

S&P 500: 7799 +51

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.