CHM Blog

Interest rates continue to increase, after six days of consolidation after the run-up that began three weeks ago, today new highs. The 10 yr started at 1.82% gapping up from 1.79% last Friday, MBS prices down 27 bps from Friday. The 10 yr note yield this morning is the highest in over two years as markets continue to discount Fed rate increases; presently the consensus is three increases this year with the first one in March; while three cuts appear to be certain there are some that are predicting four increases. Given the amount of rate increases it may be that the Mach rate increase that is expected could be a 50 bp increase, 25 bps had been what was expected. Swap markets are now pricing in more than 25 basis points of tightening by the end of March. With no move anticipated at this month’s meeting, that suggests traders are at least contemplating the possibility of a 50-basis-point move in March.

More inflation news this morning; Crude prices rose to their highest level since the 2014 shale-induced oil crash, a milestone in a rally that is gathering momentum as geopolitical tensions threaten to knock supply. Demand for oil was stronger than expected in the final three months of 2021, as rising Covid-19 cases failed to diminish global appetite for crude or result in significant mobility restrictions, the Organization of the Petroleum Exporting Countries said Tuesday. Brent oil is at a seven year high in Europe. Goldman Sachs Group Inc. raised its Brent forecasts through 2022 and 2023 and predicted $100 oil in the third quarter: driving inflation higher.

At 9:30 am ET the DJIA opened -430, NASDAQ -244, S&P -54. 10 yr 1.84% +5 bps. FNMA 3.0 30 yr coupon at 9:30 am -25 bps and -51 bps from 9:30 am Friday.

At 10:00 am Jan NAHB housing market index, expected at 84 unchanged from Dec, as reported the index slipped to 83; full data at 4:30 pm.

PRICES @ 10:00 AM

10 yr note: 1.83% +4 bp

5 yr note: 1.61% -6 bp

2 Yr note: 1.02% +6 bp

30 yr bond: 2.17% +3 bp

Libor Rates: 1 mo 0.103%; 3 mo 0.248%; 6 mo 0.418%; 1 yr 0.767% (1.17.22)

30 yr FNMA 3.0: @9:30 101.97 -25 bp (-51 bp from 9:30 Friday)

30 yr FNMA 3.5: @9:30 104.34 -25 bp (-35 bp from 9:30 Friday)

30 yr GNMA 3.0: @9:30 102.11 -25 bp (-47 bp from 9:30 Friday)

Dollar/Yuan: $6.3527 +$0.0039

Dollar/Yen: 114.54 -0.08 yen

Dollar/Euro: $1.1368 -$0.0039

Dollar Index: 95.58 +0.32

Gold: $1812.50 -$4.00

Bitcoin: 41,401 -758

Crude Oil: $84.81 +$1.00

DJIA: 35,346 -565

NASDAQ: 14,629 -264

S&P 500: 4592 -70

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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