CHM Blog

This afternoon at 2 pm ET the minutes from the Jan FOMC minutes (2/1/23). What we are looking for is any members that were talking about increasing the FF rate higher than the 25 bps that occurred. Since the meeting three weeks ago economic releases have been reported better than forecasted. Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard, who do not vote in monetary policy decisions this year, were alone in seeing the case for doing another 50 basis-point hike.

The consumer isn’t slowing down based on recent retail sales data and the supply chain is improving. Wages are increasing to match inflation increases. Inflation is slowing but still is historically high, the Fed continues to say (hope) that the needed higher rates will not push the economy into recession. Despite the tougher talk and hot inflation data, markets still largely expect the Fed to go with the quarter-point move next month.

At 9:30 am the DJIA opened +42, NASDAQ +38, S&P +6. 10 year at 9:30 am 3.92% -4 bps. At 9:30 am MBS prices +17 bps from yesterday’s close and -11 bps from 9:30 am yesterday, (the heavy selling didn’t occur until after 10 am yesterday).

At 1 pm Treasury will auction 5 year notes, yesterday’s 2 year auction was met with demand that matched the averages over the last 12 2 year auctions.

FOMC minutes at 2 pm; until then markets should be relatively quiet. Yesterday the reaction to better PMI data easily broke our support at 3.90%, this morning so far some rebound. The 10 is near term over-extended, getting back below 3.90% is important, technically if the note stays above it the next support level is 4.00% then 4.20%. 10 year at 10 am trying to get back to 3.90%. If the note does return to 3.90% it will keep that level as a key support, with yesterday considered a knee jerk reaction to the strong PMI report.

PRICES @ 10:00 AM

10 year note: 3.91% -5 bp

5 year note: 4.12% -6 bp

2 Year note: 4.66% -3 bp

30 year bond: 3.92% -5 bp

Libor Rates: 1 month 4.592%; 3 month 4.922%; 6 month 5.257%; 1 year 5.693% (2/21/23)

30 year FNMA 6.0: @9:30 am 101.17 +16 bp (+6 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.77 +20 bp (+8 bps from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.05 +20 bp (-3 bp from 9:30 am yesterday)

Dollar/Yuan: $6.8935 +$0.0199

Dollar/Yen: 134.46 -0.56 yen

Dollar/Euro: $1.0655 +$0.0009

Dollar Index: 104.07 -0.11

Gold: $1844.60 +$2.10

Bitcoin: 24,031 -152

Crude Oil: $75.71 -$0.65

DJIA: 33,263 +33

NASDAQ: 11,509 +17

S&P 500: 3999 +2

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.