CHM Blog

This morning the 10 year note began down 2 bps but didn’t last after 8:30 am ET data, at 9 am 4.12% +1 bp. Fed officials, central bankers, combined to caution that rate cuts may not be as certain as thought as recently as last week. Comments coming out of the World Economic Forum in Davos Switzerland were almost unanimous that the anticipated rate cuts won’t be as aggressive as had been the belief, from a 75% probability of the first rate cut by the Fed the odds today dropping to 50%. Yesterday’s strong December retail sales data and inflation, although declining is still stubbornly high.

Increasing tensions in the Middle East overnight; more strikes against the Houthis by the US, 14 missile strikes. Pakistan launching missile attacks against militants in Iran. Slowly the tensions are building but so far US and global markets appear not to be concerned.

Weekly jobless claims expected at 206K increased just 187K down 16K from the week before, the lowest claims in 16 months. The 4-week average of claims at 203.25K down from 208.00K the prior week. More evidence of strength in the labor market, continuing claims, the number of people receiving unemployment benefits, decreased for a third straight week to 1.81 million in the week ending January 6th, the lowest in nearly three months. Yesterday the Fed released its Beige Book, details from all 12 Fed districts, saying signs that the labor market was cooling in nearly all regions of the country. The data doesn’t support what the Beige Book was selling.

December housing starts and permits: starts expected at 1.425 million increased to 1.460 million, the November starts revised from 1.560 million to 1.525 million. Permits thought to be 1.478 million increased to 1.495 million and November permits revised from 1.460 million to 1.467 million.

The anemic regional January Philadelphia Fed manufacturing index got worse, expected -6.7 reported -10.6 and December revised from -105 to -12.8. Since it’s a Fed data point it gets attention but not from traders or markets.

At 9:30 am the DJIA opened -118, NASDAQ +144, S&P +16. 10 year at 9:30 am 4.12% +1 bp. FNMA 6.0 30 year coupon at 9:30 am -3 bps from yesterday’s close and -1 bp from 9:30 am yesterday.

US debt increasing, today the Senate is scheduled to vote on another continuing resolution to keep the government operating. Debt sets the floor on how low rates can fall with US and global debt continue to climb, more supply will keep rates high.

PRICES @ 10:00 AM

10 year note: 4.11% unch

5 year note: 4.03% unch

2 year note: 4.33% -3 bp

30 year bond: 4.34% +2 bp

30 year FNMA 6.0: @9:30 am 101.08 -3 bp (-1 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.17 -1 bp (+3 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.25 -7 bp (-5 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1782 unch

Dollar/Yen: 148.05 -0.12 yen

Dollar/Euro: $1.0086 -$0.0028

Dollar Index: 103.57 +0.12

Gold: $2,013.420 +$6.70

Bitcoin: 42,633 -50

Crude Oil: $72.77 +$0.21

DJIA: 37,190 -76

NASDAQ: 14,986 +131

S&P 500: 4754 +14

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.