CHM Blog

Daily Market Analysis February 10, 2022

February 10th, 2022 8:54 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

The entire week was pointing to this morning’s Jan CPI, the first look at inflation since the extremely strong Jan employment data last Friday. At 8:30 am ET Jan CPI confirmed inflation is increasing, a least based off of consensus compared to the report. CPI expected +0.5% increased 0.6% and Dec CPI revised from +0.5% to +0.6%; yr/yr CPI expected at +7.3% increased to 7.5%. When the volatile food and energy sectors are removed CPI was expected at +0.5%, it increased 0.6%; yr/yr increased to 6.0% against estimates of 5.9%, Dec yr/yr +5.5%. No matter any spin or excuses, inflation isn’t slowing, and the Fed continues to fight rear guard action. Although the data this morning will tilt more toward a 50 bp FF increase next month. Based on CPI inflation now at a 4 decade high. The steady run-up in prices has eroded recent wage gains and diminished American families’ purchasing power, sucking much of the air out of what has been an exceptional bounce back in the U.S. economy.

The media continues to blame the inflation increase on the supply chain. Besides increasing rates, what can the Fed do. Higher rates are only part of the solution, and we doubt it isn’t the whole answer. Some components of inflation that have increased are not likely to reverse; wages, rents, housing prices are expected to offer a tailwind to inflation in coming months. Like wage increases, shelter is often considered a “sticky” component of inflation, meaning once prices rise, they’re less likely to come back down. The average U.S. household is spending an additional $250 a month because of inflation that is rising at its fastest rate in nearly 40 years, a new economic analysis showed. “A lot of people are hurting because of high inflation. $250 a month—that’s a big burden,” said Ryan Sweet, a senior economist at Moody’s Analytics who conducted the analysis. “It really hammers home the point of ‘what is the cost of inflation?’”

At 9:30 am the DJIA opened -236, NASDAQ -251, S&P -52. 10 yr at 9:30 am 2.00 % +7 bps. FNMA 3.0 30 yr -44 bps and -60 bps from 9:30 am yesterday; FNMA 3.5 30 yr -50 bps and -63 bps from 9:30 am yesterday.

Earlier this morning, at 8:30 am weekly jobless claims were expected at 230K, as reported 223K -16K from the previous week.

At 1:00 pm Treasury will complete the quarterly refunding with $23B of 30 yr bonds; yesterday’s 10 yr auction was met with very strong biding and demand mostly from foreign investors and central banks.

Next Monday Jan PPI, inflation at the wholesale level.

10 yr finally tagged 2.0% and held as we expected, how much improvement is questionable. The stock indexes opened weak but showing some improvement from the open.

PRICES @ 10:00 AM

10 yr note: 1.98% +6 bp

5 yr note: 1.89% +7 bp

2 Yr note: 1.49% +12 bp

30 yr bond: 2.28% +4 bp

Libor Rates: 1 mo 0.123%; 3 mo 0.377%; 6 mo 0.634%; 1 yr 1.094% (2/9/22)

30 yr FNMA 3.0: @9:30 100.73 -44 bp (-60 bp from 9:30 yesterday)

30 yr FNMA 3.5: @9:30 103.00 -50 bp (-63 bp from 9:30 yesterday)

30 yr GNMA 3.0: @9:30 101.13 -34 bp (-48 bp from 9:30 yesterday)

Dollar/Yuan: $6.3572 -$0.0055

Dollar/Yen: 116.20 +0.66 yen

Dollar/Euro: $1.1398 -$0.0028

Dollar Index: 95.79 +0.29

Gold: $1833.20 -$3.40

Bitcoin: 43,990 -513

Crude Oil: $90.69 +$1.03

DJIA: 35,675 -93

NASDAQ: 14,397 -93

S&P 500: 4564 -22

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on February 10th, 2022 8:54 AM

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