CHM Blog

Rates have improved since late October on the assumption that the Fed will begin lowering rates. CPI tomorrow, always a key inflation read, is now more important with that optimistic outlook fading. To continue, tomorrow’s CPI must confirm inflation is slowing. The estimates for core CPI are for inflation to have slowed; month/month core expected to have declined from November from 0.3% to 0.2%, year/year 3.8% from 4.0%. If the forecasts hold rates will get support, if not rates will increase taking the bellwether 10 year note up to 4.10%.

Last week MBA mortgage applications increased 9.9% the biggest weekly increase over the last year. Purchase apps +6.0% while refinance apps increased 19%. MBA’s survey covers about 75% of all mortgage applications.

We have been bringing up the climbing US debt, this morning Bloomberg jumped in. Since early November the debt crisis was swept under the rug as inflation outlooks began to overtake concerns about funding it. Funding the debt here and globally will put a cap on how low long-term rates will go. Public debt across advanced economies has soared to more than 112% of GDP from about 75% two decades ago, data from the International Monetary Fund show. We are entering into government projections for 2024 borrowing, estimates are $2.1 trillion of new bonds to finance spending, an increase of 7.0% according to Bloomberg Intelligence.

At 9:30 am the DJIA opened +23, NASDAQ +25, S&P +5. 10 year 4.00% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +15 bps from yesterday’s close and +23 bps from 9:30 am yesterday.

At 1 pm Treasury will auction $37B of 10 year notes.

CPI tomorrow and PPI on Friday are the last inflation data until January 26th when December PCE data will be released; the FOMC meeting is January 31st.

PRICES @ 10:00 AM

10 year note: 4.00% -2 bp

5 year note: 3.95% -2 bp

2 year note: 4.34% -3 bp

30 year bond: 4.17% -1 bp

30 year FNMA 6.0: @9:30 am 101.33 +15 bp (+23 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.18 unch (+2 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.56 +20 bp (+25 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1707 +$0.0128

Dollar/Yen: 145.49 +1.01 yen

Dollar/Euro: $1.0935 +$0.0002

Dollar Index: 102.58 +0.01

Gold: $2,034.60 +$1.60

Bitcoin: 45,007 -552

Crude Oil: $73.09 +$0.86

DJIA: 37,595 +70

NASDAQ: 14,862 +5

S&P 500: 4763 +7

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.