CHM Blog

The day starting quietly just as yesterday and last Friday. Waiting for more inflation data that will come on Friday with November PCE, Powell’s favorite inflation gauge. In the meantime, interest rate markets continue to consolidate the decline in rates last week. Overnight the 10 year traded in a very narrow range, the high yield 3.95% +1 bps, the low 3.90% at 8 am ET.

The only data today, November housing starts and permits. Starts were stronger than forecasts at 1.560 million against 1.360 million estimates, October starts were revised lower than originally released at 1.359 million from 1.372 million. Building permits thought to be 1.470 million were lower at 1.460 million, October revised from 1.487 million to 1.498 million. Single-family housing starts were at a rate of 1.143 million, 18% higher than the revised October figure of 969K. Single family permits at a rate of 976K, or 0.7% above the revised October figure of 969K.

At 9:30 am the DJIA opened +45, NASDAQ +40, S&P +7. 10 year note at 9:30 am 3.92% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +6 bps from yesterday’s close and +10 bps from 9:30 am yesterday.

The renewed certainty in financial markets the Fed will cut rates next year, the debate these days is by how much will the Fed lower rates. The strong rally last week is holding well, some chop but investors and traders not abandoning the rate cut outlooks even with some Fed officials trying to cool down the enthusiasm. 2024 presently is expected to be another strong year for equities. Yesterday Goldman Sachs increased their outlook for the S&P 500 index the 5200, from 4700 the company was forecasting just a few weeks prior.

The current consensus, rates will decline next year; the debate though is by how much. The median forecast of strategists at the world’s biggest financial institutions is now for the 10-year US Treasury yield, a benchmark for multiple markets, to fall to 3.98%. That’s hardly far from its level of 3.93% as of Monday’s close, but markedly lower than its yield before the Fed’s pivot: 4.20% — itself down from a 2023 high above 5%.

PRICES @ 10:00 AM

10 year note: 3.90% -4 bp

5 year note: 3.91% -3 bp

2 year note: 4.44% -3 bp

30 year bond: 4.02% -3 bp

30 year FNMA 6.5: @9:30 am 102.36 +3 bp (+2 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 101.46 +6 bp +12 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.63 +12 bp (+19 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1059 -$0.0278

Dollar/Yen: 144.06 +1.25 yen

Dollar/Euro: $1.0980 +$0.0057

Dollar Index: 102.19 -0.37

Gold: $2054.80 +$14.30

Bitcoin: 42,261 -330

Crude Oil: $73.28 +$0.81

DJIA: 37,438 +133

NASDAQ: 14,942 +37

S&P 500: 4751 +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.

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.