August 9th, 2022 9:07 AM by Richard Sardella MLO.100007700/NMLS 233568
Stock indexes in the futures markets this morning slightly lower. Not unexpected with inflation in the headlights tomorrow and Thursday with July CPI and PPI respectively. Focus is turning to the question of whether US consumer-price index may have peaked in June as economists project the biggest drop in more than two years for July. The estimate for July CPI is for a huge decline, from 1.3% in June to +0.2% m/m, yr./yr. +8.7% from 9.1% in June. A blowout reading for nonfarm payrolls has eased worries about a recession, while corporate performance remains stellar.
The July NFIB small business optimism index was expected at 89.2 from 89.5 in June, as released 89.9.
Q2 preliminary productivity and unit labor costs at 8:30 am ET. Productivity was expected at -4.5%, it was -4.6%. Unit labor costs expect4ed +9.3% increased 10.8%. More news that clouds the inflation outlook, labor costs are outstripping the central bank’s inflation goal by nearly five times on an annual basis, suggesting sustained upward pressure on consumer prices and ultimately making the Fed’s inflation fight more difficult.
At 1 pm this afternoon Treasury will auction $42B of 3 yr. notes. Tomorrow at 1 pm $35B of new 10s will be sold.
JPMorgan Chase & Co. strategists led by Marko Kolanovic, one of Wall Street’s staunchest bulls saying investors should modestly trim stock holdings and shift the money to commodities after equities outpaced other assets amid receding recession fears. The S&P 500 Index has advanced 13% from its 2022 low reached in June. By contrast, a Bloomberg index tracking commodities from oil to copper has declined over that stretch. “Better-than-feared economic data are inducing equity and credit markets to price out recession risk,” they wrote. “With commodities lagging other risky assets, we shift some of our risk allocation from equities to commodities.”
At 9:30 am the DJIA opened +14, NASDAQ -64, S&P -3. 10 yr. at 9:30 am 2.80% +4 bps. FNMA 4.5 30 yr. coupon -12 bps and +12 bps from 9:30 am yesterday. 5.0 coupon at 9:30 am -11 bps and +18 bps from 9:30 am yesterday.
There isn’t anymore scheduled data today. The total focus today on tomorrow’s July CPI that is expected to show a decline in inflation.
PRICES @ 10:00 AM
10 yr note: 2.80% +4 bp
5 yr note: 2.98% +6 bp
2 Yr note: 3.25% +4 bp
30 yr bond: 3.03% +4 bp
Libor Rates: 1 mo 2.388%; 3 mo 2.911%; 6 mo 3.569%; 1 yr 3.994% (8/8/22)
30 yr FNMA 5.0: 102.09 -11 bp (+18 bp from 9:30 am yesterday)
30 yr FNMA 4.5: 101.06 -12 bp (+12 bp from 9:03 am yesterday)
30 yr GNMA 4.0: 100.48 -28 bp (+11 bp from 9:30 am yesterday)
Dollar/Yuan: $6.7515 +$0.0006
Dollar/Yen: 134.97 -0.05 yen
Dollar/Euro: $1.0244 +$0.0048
Dollar Index: 106.07 -0.37
Gold: $1813.40 +$8.20
Bitcoin: 23,291 -781
Crude Oil: $91.74 +$0.98
DJIA: 32,786 -46
NASDAQ: 12,484 -160
S&P 500: 4121 -19
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.