CHM Blog

Data at 8:30 am ET, December retail sales expected +0.4%, reported at 0.0, excluding vehicles expected +0.4%, was 0.0. Q4 2025 employment cost index thought to be +0.8%, reported +0.7%, year/year 3.4% with forecasts at 3.5%. The key takeaway from the report is that there was some moderation in employment costs on a year-over-year basis that will help temper inflation worries. December import price estimates +0.1%, reported +0.1%, year/year unchanged; export prices month/month +0.3% against estimates at +0.1%, year/year +3.1% from 3.3% in November.

The soft retail sales, employment cost index and import prices add more confidence that the Fed may cut rates next month. The reports are not as critical as tomorrow’s January employment numbers but when added to the recent Challenger jobs report last week the evidence is mounting. From a pure technical perspective, that the 10 year note broke below 4.20% is also encouraging.

At 9:30 am the DJIA opened +160, NASDAQ +38, S&P +10. 10 year note 4.16% -5 bps. FNMA 5.0 30 year coupon at 9:30 am +20 bps from yesterday’s close and +26 bp from 9:30 am yesterday.

At 1 pm $58B 3 year note auction.

Tomorrow January employment report, if there are no surprises to the upside the idea of a March rate cut will increase. Friday CPI inflation. The two reports will set the tone for the next couple of weeks.

There appears to be an increasing global concern in the debt markets that is leading to talks of debt sanctions, not yet a major problem but could be in the months ahead. Today China saying it will reduce buying of US treasury debt. If sanctions were to develop it would mean higher interest rates here and globally.

PRICES @ 10:00 AM

10 year note: 4.15% -6 bp

5 year note: 3.70% -5 bp

2 year note: 3.46% -4 bp

30 year bond: 4.79% -7 bp

30 year FNMA 5.0: @9:30 am 100.10 +20 bp (+26 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 101.49 +17 bp (+19 bp from 9:30 am yesterday)

30 year GNMA 5.0: @9:30 am 100.29 +11 bp (+22 bp from 9:30 am yesterday)

Dollar/Yen: 154.34 -1.54 yen

Dollar/Euro: $1.1912 -$0.0004

Dollar Index: 96.65 -0.16

Gold: $5,079.00 -$0.40

Bitcoin: 68,202 -2552

Crude Oil: $64.31 -$0.05

DJIA: 50,502 +366

NASDAQ: 23,263 +25

S&P 500: 6980 +16

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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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.