January 19th, 2023 9:58 AM by Richard Sardella MLO.100007700/NMLS 233568
The 10 yr. closed yesterday at 3.38%, the high overnight 3.42% and at 8 am ET this morning 3.38% unchanged. Yesterday the DJIA fell 614 points, at 8 am this morning down another 286.
Three data points at 8:30 am. Weekly jobless claims expected at 215K were just 190K, down 15K from the prior week, the 4 week average 206K down from 212.50K the week prior. The labor market is relentless and worries the Fed that wants wages to slow and unemployment increase to quell inflation.
Dec housing starts and permits; starts expected 1.362 mil increased 1.382 mil, Nov revised from 1.427 mil to 1.401 mil. Residential starts decreased 1.4% last month to a 1.38 million annualized rate, a five-month low; single-family homebuilding jumped to a 909,000 annualized rate last month, the most since August. However, for all of last year about 1 million one-family houses were started, down 10.6% from 2021 — the biggest drop since 2009. Building permits expected 1.380 mil were lower at 1.330 mil November revised better to 1.351 mil from 1.342 mil.
January Philadelphia Fed manufacturing index expected at -10.3 was slightly better at -8.9. US manufacturing has cooled the last two months based on a number of regional measurements.
There wasn’t a lot of reaction to the three reports, the 10 yr. increased 3 bps back above the key chart technical support at 3.40%. MBS prices down 12 bps from yesterday.
At 9:30 am the DJIA opened -180, NASDAQ -58, S&P -20. 10 yr. 3.40% unchanged. FNMA 5.5 30 yr. coupon at 9:30 am -5 bps from yesterday’s close and -39 bps from 9:30 am yesterday.
Recession? Inflation? Both continue to keep analysts guessing and forecasts from Wall Street still no consensus. Aren’t we in a recession? The traditional definition has always been two consecutive quarters of GDP decline, we are there but economists and markets have decided to ignore that definition. It is convenient when now the debate is will the US suffer a recession in 2023? Presently you can find any opinion that suits your view. The stock market under pressure with declining consumer spending, Dec retail sales fell yesterday dropping the DJIA 614 points.
Inflation is slowing, about every way to look at it. The Fed believes it, markets believe it, the data confirms it. The Fed though isn’t likely to relent, the FF rate will continue to increase, reports from suppliers growing that those monthly increases in consumer prices are coming to an end. Conagra announced no more price increases, some grocery prices are declining, used car prices falling, energy prices holding.
PRICES @ 10:00 AM
10 yr note: 3.40% +3 bp
5 yr note: 3.46% +2 bp
2 Yr note: 4.11% +2 bp
30 yr bond: 3.57% +3 bp
Libor Rates: 1 mo 4.486%; 3 mo 4.808%; 6 mo 5.108%; 1 yr 5.364% (1/18/23)
30 yr FNMA 6.0: @9:30 am 102.28 +3 bp (-19 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 101.47 -5 bp (-39 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 101.27 -2 bp (-15 bp from 9:30 am yesterday)
Dollar/Yuan: $6.7765 +$0.0284
Dollar/Yen: 128.38 -0.54 yen
Dollar/Euro: $1.00817 +$0.0020
Dollar Index: 102.23 -0.13
Gold: $1918.30 +$11.60
Bitcoin: 20,876 +101
Crude Oil: $80.19 +$0.68
DJIA: 33,089 -208
NASDAQ: 10,857 -98
S&P 500: 3900 -28
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.