CHM Blog

The stock market was slammed yesterday, partly due to Jerome Powell's surprising announcement that the Fed would increase the speed of the tapering plan previously announced and finally put an end to the Fed’s use of transitory to define the current inflation climb. Powell at the Senate Banking Committee said the FOMC will discuss moving quicker to end its $120B a month purchases of treasuries and MBSs, the plan was reducing by $15B a month so the end would happen next June. Now Powell wants it over sooner, possibly by March or April 2022 to open the door to increase the FF rate. The pickup in inflation rates around the world will be longer-lasting and sharper than previously anticipated, with a growing risk that households and businesses grow accustomed to faster price rises. Releasing the last of its four reports on the economic outlook this year, the OECD said it now expects consumer-price inflation in the U.S. to average 4.4% in 2022, up from 3.1% when it last released forecasts in September. It said it now expects inflation in the Eurozone to be 2.7%, up from 1.9%. The new forecasts were made before the discovery of the Omicron variant. Today Powell will go back the Congress this time to the House Financial Services Committee.

At 8:15 am ET ADP reported private jobs in November increased 534K, the estimates were for 525K. MBS prices traded down 8 bps on the report then recovered to unchanged, the 10 yr. note was up 4 bps at 1.48% after hitting 1.50% overnight. Stock indexes at 9 am were better, the DJIA lost 653 yesterday this morning +316.

Weekly MBA mortgage applications last week, it was Thanksgiving Week, so we don’t put a lot attention to it. The composite -7.2%, purchase apps +5.0% but re-finances were down 15.0% from the previous week.

At 9:30 am the DJIA opened +290, NASDAQ +214, S&P +55. 10 yr. at 9:30 am 1.48% +4 bp. FNMA 2.5 30 yr. coupon -6 bps from yesterday’s close and 53 bps lower than 9:30 am yesterday.

At 10 am November ISM manufacturing index was thought to be 61.1 from 60.8 in October, the index spot on at 61.1. October construction spending +0.2% against forecasts of +0.6%.

At 10 am Jerome Powell scheduled to testify at the House Financial Services Committee.

Later this afternoon (2 pm) the Fed’s Beige Book.

PRICES @ 10 AM

10 yr. note: 1.48% +4 bp

5 yr. note: 1.20% +4 bp

2 Yr. note: 0.59% +2 bp

30 yr. bond: 1.82% +3 bp

Libor Rates: 1 mo. 0.094%; 3 mo. 0.173%; 6 mo. 0.243%; 1 yr. 0.382% (11/30/21)

30 yr. FNMA 3.0: @9:30 am 103.66 -5 bp (-28 bp from 9:30 am yesterday)

30 yr. FNMA 2.5: @9:30 am 102.27 -6 bp (-53 bp from 9:30 am yesterday)

30 yr. GNMA 2.5: @9:30 am 102.03 -23 bp (-67 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3685 +$0.0042

Dollar/Yen: 112.92 -0.24 yen

Dollar/Euro: $1.1348 +$0.0009

Dollar Index: 95.77 -0.22

Gold: $1787.90 +$11.40

Bitcoin: 58,393 +913

Crude Oil: $68.39 +$2.21

DJIA: 34,817 +333

NASDAQ: 15,752 +214

S&P 500: 4630 +63

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

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