February 10th, 2023 9:45 AM by Richard Sardella MLO.100007700/NMLS 233568
Early this morning the 10 year note yield increased to 3.72% +6 bps from yesterday, by 9 am ET back to 3.68% +2 bp: MBS prices at 9 am 22 bps lower than yesterday. Yesterday the 10 year note broke above the chart trend line that goes back to last October. Investors, after a plethora of Fed officials and led by Jerome Powell, have gotten the message the Fed isn’t anywhere ready to think about ending interest rate increases that many were anticipating. Since employment data last Friday, the bellwether 10 has increased 30 bps. Barclays commenting today, the Federal Reserve will continue with 25 bps rate hikes through June, followed by a pause through December.
Russia saying it will reduce oil output because of sanctions, plans to cut its oil output by 500,000 barrels a day next month. OPEC delegates saying OPEC won’t increase output in response. The reduction is equivalent to about 5% of its January output. Early this morning crude price was up over two dollars. In rare public comments last Wednesday, Iran's national representative to OPEC, Afshin Javan, said oil may rebound to around $100 in the second half of the year, adding that OPEC+ was likely to keep its current output policy at its next meeting. Reuters spoke privately to five more OPEC country officials about the prospect of $100 oil. Of these, three saw oil as more likely to rally in 2023 than decline, with two predicting prices heading back to $100. Too soon to speculate, but $100.00 oil will keep inflation from slowing.
Congress still working on increasing the US debt ceiling with little headway. The low interest rate on the debt is over as interest rates increase leading to concern the Treasury will run out of money prior to June. Janet Yellen said she could cut some payments and keep paying debt until June, now that is being questioned. “It is true that interest rates have gone up, and slowly that raises the cost to the country and to the federal budget of interest on the debt, so in that sense it’s a drag. But our budget projections have long assumed that interest rates would move back toward more normal levels.” The Treasury’s spending on interest on the debt is up 41% to $198 billion in the first four months of this fiscal year compared with $140 billion in the same period last year, according to a Congressional Budget Office estimate of spending through January. The current debt limit is $31.4 trillion.
At 9:30 am the DJIA opened -10, NASDAQ -60, S&P -7. 10 year after hitting 3.72% earlier, at 9:30 am 3.68% +2 bps. FNMA 5.5 30 year coupon at 9:30 am -3 bps from yesterday’s 40 bp drop, and 36 bps lower than 9:30 am yesterday.
At 10 am, a few minutes ago the headline on the U. of Michigan consumer sentiment index was expected at 64.4 from January’s 64.9, as released the index increased to 66.4.
Next Tuesday the next inflation read with January CPI. This week hasn’t revealed any significant economic reports, next week the calendar is full.
PRICES @ 10:00 AM
10 yr note: 3.70% +3 bp
5 yr note: 3.89% +3 bp
2 Yr note: 4.50% +1 bp
30 yr bond: 3.78% +3 bp
Libor Rates: 1 mo 4.572%; 3 mo 4.872%; 6 mo 5..112%; 1 yr 5.456% (2/9/23)
30 yr FNMA 6.0: @9:30 am 101.80 +2 bp (-29 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 100.61 -3 bp (-36 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 100.91 -3 bp (-14 bp from 9:30 am yesterday)
Dollar/Yuan: $6.8069 +$0.0262
Dollar/Yen: 130.88 -0.66 yen
Dollar/Euro: $1.0708 -$0.0035
Dollar Index: 103.39 +0.17
Gold: $1875.50 -$3.00
Bitcoin: 21,861 +20
Crude Oil: $79.13 +$1.07
DJIA: 33,680 -21
NASDAQ: 11,686 -103
S&P 500: 4069 -12
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.