CHM Blog

The first inflation report since the shutdown and it was better than forecasts. November CPI month/month overall inflation forecasts at +0.3% reported +0.2%, year/year overall estimates +3.1% year/year dropped to 2.7%. Core month/month CPI thought to be +0.3% hit at +0.2%, year/year core thought to be +3.0% fell to 2.6%. Inflation at its lowest levels now since July and opens the door for the Fed to be more tilted to lowering rates. Core inflation, ex food and energy the lowest since March. The initial reaction dropped the 10 year note 4 bps to 4.11% and MBS prices up 16 bps from yesterday’s closes. Stock indexes sharply lower yesterday saw initial improvements in futures markets. The report has one concern, it does not include October inflation that was lost because politicians could not agree on a health care program, and the still can’t today.

Weekly jobless claims also reported this morning; estimates were for claims at 225K last week, reported at 224K and down from 237K the prior week. The takeaway, December jobs are holding steady. Claims have been volatile in recent weeks, reflecting challenges adjusting the data around the Thanksgiving holiday. In the meantime, continuing claims rose to 1,897 in the week ending December 6 (estimates 1,930), from a downwardly revised 1,830 in the previous period, though below forecasts of 1930 thousand.

At 9:30 am the DJIA opened better after selling yesterday. DJIA +394, NASDAQ +348, S&P +74. 10 year note 4.11% -4 bp. FNMA 5.0 coupon +18 bps from yesterday’s close and +20 bp from 9:30 am yesterday.

Tomorrow University of Michigan consumer sentiment data, November existing home sales. Possibly November PCE and consumer spending (some calendars say yes, others no).

PRICES @ 10:00 AM

10 year note: 4.70% +1 bp

5 year note: 4.46% -1 bp

2 year note: 4.28% -2 bp

30 year bond: 4.94% +2 bp

30 year FNMA 6.0: @9:30 am 100.17 -8 bp (-10 bp from 10 am yesterday)

30 year FNMA 6.5: @9:30 am 102.09 -6 bp ( -8 bp from 10 am yesterday)

30 year GNMA 6.0: @9:30 am 100.56 -4 bp (-1 bp from 10 am yesterday)

Dollar/Yen: 158.31 +0.25 yen

Dollar/Euro: $1.0294 -$0.0047

Dollar Index: 109.22 +0.68

Gold: $2,681.40 +$16.00

Bitcoin: 95,003 -1458

Crude Oil: $74.23 -$0.02

DJIA: 42,239 -199

NASDAQ: 19,477 -12

S&P 500: 5899 -10

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.

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