CHM Blog

Daily Market Analysis August 4, 2022

August 4th, 2022 9:17 AM by Richard Sardella MLO.100007700/NMLS 233568

Daily Market Analysis

The 10 dropped 2 bps yesterday and this morning in early trading the 10 down another 8 bps. MBS prices yesterday increased 39 bps and early this morning up another 9 bps at 8:30 am ET.

The Bank of England increased its interest rate by 50 bps, the largest increase since 1995 and the first half-point increase since the bank was granted independence in 1997. The British economy is expected to contract for five consecutive quarters beginning in the fourth quarter of 2022, the bank said. The British economy slipping deep into recession according to the bank, the most in decades; a product of an end to Covid-19 lockdowns, global supply chain issues and soaring energy and food prices. The Brits bank governor saying, “Returning inflation to the 2% target remains our absolute priority,” he said. “Inflation hits the least well off hardest. If we don’t act…the consequences later will be worse.”

The fears of a wider and longer-term recession are growing globally, China and Asian economies are weakening, in Europe the outlooks getting more negative. Here though, while recession is a focus there are many analysts and Wall Street firms taking the view recession won’t last or even begin. Meantime officials continue to push back, saying the bank will continue to increase rates and the economic outlook is troubling. Yesterday the stock indexes rallied hard, in early trading this morning not much movement.

The Libor rate rose for the fourth straight session, climbing roughly 2.5 basis points to 2.83%, the highest since November 2008; traders brace for steady interest-rate hikes from the Federal Reserve, backing away from speculation the central bank will ease up as the economy shows signs of cooling. Several Fed policy makers indicated that they’re not close to done fighting inflation, prompting traders to reduce bets on rate cuts next year. Fed swaps are pricing about 61 basis points of additional hikes for the September meeting, indicating some expectations the central bank will enact another three-quarter-point move at its next gathering.

Big employers are cutting jobs, Amazon 100,000 and others beginning to follow. Weekly jobless claims this morning increased 6K to 260K, the highest since last Nov. The 4-week average, smoothing the weekly gyrations at 254.75K from 248.75K the prior week.

At 9:30 am the DJIA opened -27, NASDAQ +9. S&P unchanged. The 10 yr. note at 9:30 am 2.70% unchanged. FNMA 4.5 30 yr. coupon -5 bps from yesterday and 52 bps better than 9:30 am yesterday.

The yield curve continues to invert, driven by weaker economic outlooks and recession views. The 2/10 inversion now at 39 bps. The 1 yr. treasury bill at 3.00%, 29 bp inversion.

PRICES @ 10:00 AM

10 yr note: 2.68% -2 bp

5 yr note: 2.80% -4 bp

2 Yr note: 3.08% +1 bp

30 yr bond: 2.95% -4 bp

Libor Rates: 1 mo 2.376%; 3 mo 2.832%; 6 mo 3.389%; 1 yr 3.843% (8/3/22)

30 yr FNMA 5.0: 102.34 -6 bp (+31 bp from 9:30 am yesterday)

30 yr FNMA 4.5: 101.41 -5 bp (+52 bp from 9:30 am yesterday)

30 yr GNMA 4.0: 100.86 -3 bp (+64 bp from 9:03 am yesterday)

Dollar/Yuan: $6.7520 -$0.0059

Dollar/Yen: 133.55 -0.31 yen

Dollar/Euro: $1.0191 +$0.0024

Dollar Index: 106.30 -0.20

Gold: $179270 +$16.30

Bitcoin: 23,120 --204

Crude Oil: $89.63 -$1.06 (gas prices continue to fall)

DJIA: 32,781 -37

NASDAQ: 12,708 +40

S&P 500: 4155 +0.53

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 4th, 2022 9:17 AM



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