CHM Blog

Two key data releases at 8:30 am; weekly jobless claims and July PPI. Weekly jobless claims were expected at 230K, reported at 224K. Outstanding continuing claims eased by 15,000 from the over-three-year high in the prior week to 1,953,000, below expectations of 1,960,000. The results continued to reflect a softening, but still robust, labor market with a slowdown in hiring due to the elevated continued claims, contrasting somewhat with the aggressive downward revisions in payrolls by the BLS that rendered real employment suspect.

Unlike July CPI reported last Tuesday, July producer prices expected to be rather nascent exploded higher. Month/month PPI thought to be +0.2% from June increased 0.9%, year/year forecasts were at +2.6% increased 3.3%; core PPI month/month estimates were +0.2% but increased 0.9%, June PPI was 0.0%; year/year core (ex food and energy) thought to be +0.2% increased 3.7% and up from June’s 2.6%. The month/month was the biggest increase in producer prices since June 2022. Cost of services went up 1.1%, led by a 3.8% surge in margins for machinery and equipment wholesaling. Prices of goods increased 0.7%, with prices for fresh and dry vegetables jumping 38.9%.

On the PPI release the stock indexes after trading relatively unchanged from yesterday came under pressure, at 9 am the DJIA down 165 points, NASDAQ -103, S&P -24. The 10 year note at 9 am 4.24% unchanged from yesterday, MBS prices +2 bps.

PPI data won’t change the fact that the Fed will cut the FF rate by 25 bps at the September FOMC meeting. Treasury Secretary Scott Bessent urged policymakers to use the September meeting to kick off a cutting cycle, saying "We could go into a series of rate cuts here, starting with a 50 basis point rate cut in September". Presently betting on 50 bps is a huge leap of faith, this Fed has shown little to no enthusiasm for stepping out in front when it comes to lowering rates.

Next Thursday the annual Jackson Hole meeting of key global policy makers and economists will get under way; Powell as usual will be the key speaker. The theme, "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy". Powell is a lame duck and under huge criticism from The President.

At 9:30 am the DJIA opened -195, NASDAQ -53, S&P -21. 10 year at 9:30 am 4.26% +2 bps. FNMA 6.0 30 year coupon at 9:30 am -3 bps from yesterday’s close and -2 bps from 9:30 am yesterday.

PRICES @ 10:00 AM

10 year note: 4.26% +2 bp

5 year note: 3.80% +3 bp

2 year note: 3.73% +4 bp

30 year bond: 4.85% +2 bp

30 year FNMA 6.0: @9:30 am 101.92 -5 bp (unch from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 103.50 -4 bp (+1 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 101.86 -9 bp (+1 bp from 9:30 am yesterday)

Dollar/Yen: 147.38 unch

Dollar/Euro: $1.1654 -$0.0052

Dollar Index: 98.10 +0.26

Gold: $3,397.00 -$11.30

Bitcoin: 118,206 -4602

Crude Oil: $63.54 +$0.89

DJIA: 44,785 -137

NASDAQ: 21,696 -17

S&P 500: 6456 -11

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.