CHM Blog

Yesterday the 10 year note -2 bps at 4.20%, MBS prices gained 11 bps. This morning with little news the 10 up 2 bps to 4.22%, MBS prices at 8:30 am ET -5 bps.

There isn’t much on the calendar today; Treasury will auction $58B of 3 year notes at 1 pm this afternoon, recent Treasury borrowing has been meeting with decent demand with the weakening dollar. Prior to the auction, at 8:30 am the June US trade deficit was forecast at -$61.5B and reported at -$60.2B. At 10 am the July ISM services sector index was expected at 51.5 from 50.8 in June.

Jeffrey Gundlach, CEO and COO of DoubleLine Capital, in an interview on CNBC talked about rates. He was initially believing the Fed would cut rates two time this year but after last Friday’s jobs revision he sees three cuts. His main talking points were predictions for easier monetary policy, for stocks to rally as a consequence, for the dollar to soften and for the U.S. Treasury curve to steepen (whereby long bond yields currently at 4.801% trade much higher than short-term notes. In other words, short term rates will decline more than the key 10 year note and 30 year bond keeping mortgage rates higher than some now believe given the Fed rate cuts. The last time the Fed was in a cutting mood short term rates fell but long-term rates increased. He is bearish the dollar, bullish on stocks with lower rates, bullish gold and expects the yield curve (10s versus 2s) now at 110 bps to widen to 150 bps.

At 9:30 am the DJIA opened +11, NASDAQ +6, S&P +4. 10 year note 4.23% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -5 bps from yesterday’s close and -2 bps from 9:30 am yesterday.

At 10 am July ISM services sector index expected at 51.5 declined to 50.1.

The 3 year note auction at 1 pm is key to this afternoon’s trading.

PRICES @ 10:00 AM

10 year note: 4.22% +3 bp

5 year note: 3.78% +3 bp

2 year note: 3.72% +4 bp

30 year bond: 4.81% +1 bp

30 year FNMA 6.0: @9:30 am 101.84 -5 bp (-2 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 103.42 -5 bp (-9 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 101.65 -3 bp (-3 bp from 9:30 am yesterday)

Dollar/Yen: 147.62 +0.53 yen

Dollar/Euro: $1.1548 -$0.0025

Dollar Index: 98.92 +0.14

Gold: $3,434.00 +$7.60

Bitcoin: 114,306 -443

Crude Oil: $65.62 -$0.67

DJIA: 44,157 -17

NASDAQ: 21,120 +66

S&P 500: 6337 +7

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.