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Daily Market Analysis August 18, 2022

August 18th, 2022 10:40 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

Yesterday the 10 yr note yield increased 8 bps, MBS prices down 37 bps. Early this morning the 10 down 4 bps, MBS prices began +11 bp. Stock indexes early today a little better at 8:30 am ET.

At 8:30 am weekly jobless claims, expected at 265K as reported 250K; claims the week prior originally reported at 262K was revised to 252K. Claims had been inching higher over the last few weeks, the decline supports the strong employment sector. The 4-week average declined from 250K to 246.75K.

Also, at 8:30 am the August Philadelphia Fed manufacturing index thought to be at -5.0 increased to 6.2. It is a volatile series that doesn’t get much attention.

At 9:30 am the DJIA opened -2, NASDAQ +3, S&P +3. 10 yr at 9:30 am 2.87% -3 bps. FNMA 4.5 30 yr coupon +11 bps and +6 bps frm 9:30 am yesterday; FNMA 5.0 30 yr coupon +9 bps and +14 bps frm 9:30 am yesterday.

At 10 am July existing home sales, expected at 4.85 mil frm 5.12 mil; sales declined to 4.81 mil, there are 1.31 mil homes for sale, 3.3 months supply, the median sales price $403.800 up 10.8% frm a year ago, sales down 20.8% yr/yr.

At 1:20 pm KC Fed Pres. Esther George.

At 1:45 pm Minneapolis Fed Pres. Neel Kashkari.

Markets continue to be roiled with what the Fed will do at the FOMC meeting in Sept. Yesterday the minutes frm the July meeting didn’t clear the air; some members thought the strong pace of increases (75 bps) that eventually the Fed would have to slow the increases; “As the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation,”… “Many participants remarked that, in view of the constantly changing nature of the economic environment and the existence of long and variable lags in monetary policy’s effect on the economy, there was also a risk that the committee could tighten the stance of policy by more than necessary to restore price stability,” the minutes showed. Swaps traders increasingly bet that the Fed will boost rates by a half percentage point next month, rather than three-quarters of a point.

Inflation in Europe mirrors the CPI in the US; Eurozone's July CPI was up 0.1% m/m, as expected (last 0.8%) and up 8.9% yr/yr, as expected (last 8.6%). July Core CPI was down 0.2% m/m, as expected (last 0.2%) but up 4.0% yr/yr, as expected (last 3.7%). June Construction Output was down 1.25% m/m (last -0.27%). European Central Bank policymaker Schnabel said that she expects another big interest rate hike in September despite the growing risk of recession.

The 10 yr note is testing its key 40 day moving average; the last time the 10 traded above it was on June 1st. US financial markets mostly focused on what the Fed will do on Sept 21st, the FOMC meeting, there is increasing belief that the Fed will increase rates 50 bps and not 75 as had been thought a couple of weeks ago before July CPI and PPI showed inflation had stopped increasing. Yesterday’s minutes from the July FOMC meeting added to that conviction.

PRICES @ 10:00 AM

10 yr note: 2.85% -5 bp

5 yr note: 2.99% -6 bp

2 Yr note: 3.23% -5 bp

30 yr bond: 3.12% -3 bp

Libor Rates: 1 mo 2.365%; 3 mo 2.976%; 6 mo 3.507%; 1 yr 3.995% (8/17/22)

30 yr FNMA 5.0: @9:30 101.80 +9 bp (+14 bp from 9:30 am yesterday)

30 yr FNMA 4.5: @9:30 100.75 +11 bp (+6 bp from 9:30 am yesterday)

30 yr GNMA 4.0: @9:30 99.98 +6 bp (+1 bp from 9:30 am yesterday)

Dollar/Yuan: $6.7857 +$0.0047

Dollar/Yen: 135.00 -0.07 yen

Dollar/Euro: $1.0131 -$0.0048

Dollar Index: 106.89 +0.31

Gold: $1783.40 +$6.70

Bitcoin: 23,525 +117

Crude Oil: $89.98 +$1.87

DJIA: 33,396 -84

NASDAQ: 12,891 -47

S&P 500: 4265 -9

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on August 18th, 2022 10:40 AM

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