CHM Blog

At 8:30 am ET the 10 year note yield +8 bps from Friday’s close, the 2 year note up 10 bps. MBS prices began -18 bps.

The week has final December manufacturing and service sector indexes, but the keys this week are the December employment data, November JOLTS job openings and the FOMC minutes. The dollar starting stronger, crude oiler higher in early trading reacting to Iran sending a combat ship into the Red Sea after the US sunk three Houthi vessels over the weekend as the militant group from Yemen continued disrupt sea lanes. For bitcoin fans, the coin made a new high for the first time in two years (January 10th is when the SEC is expected to bless ETF investing directly in cryptos.

Always a challenge to get a new year going, this year no different, the stock market indexes very over-extended as has been the case over the last few weeks, time for a pullback that may be short-lived but may be deep and rattle the optimism. Rates have declined since the end of October convinced the Fed is about to begin lowering rates, the 10 year note yield down 1.20%, 2 year -1.0%.

Friday’s employment data forecasts have some good news for the Fed and the outlook for Fed cuts coming (assuming the forecasts prove to substantiate the estimates). Jobs in December +158K down from 199K in November, unemployment rates increased from 3.7% to 3.8%, average hourly earnings month/month from 0.4% to 0.3%, year/year from 4.0% to 3.9%.

At 9:30 am the DJIA opened -63, NASDAQ -155, S&P -26. 10 year note at 9:30 am 3.95% +7 bp (3.97% the high earlier). FNMA 6.0 30 year coupon at 9:30 am -17 bps from Friday’s close and -16 bp from 9:30 am Friday.

At 9:45 am December PMI manufacturing expected at 48.2 declined to 47.9.

At 10 am November construction spending expected +0.6% reported +0.4%.

Now that holidays are behind us; this year promises to be a better one than last year. How low rates may decline in the near term depends on how hard the stock indexes will retreat. Expect inventories to improve as sellers more motivated to sell and buyers getting over sticker shock; first time buyers though will still have a difficult time. The US housing market is entering a new phase, apartment living is increasing for many as a long-term trend, singles increasing, costs rising and the driven desire for home ownership is fading.

PRICES @ 10:00 AM

10 year note: 3.94% +6 bp

5 year note: 3.91% +6 bp

2 year note: 4.32% +6 bp

30 year bond: 4.07% +4 bp

30 year FNMA 6.0: @9:30 am 101.36 -17 bp (-16 bp from 9:30 am Friday)

30 year FNMA 6.5: @9:30 am 102.34 -13 bp 9-21 bp from 9:30 am Friday)

30 year GNMA 5.5: @9:30 am 100.40 -32 bp (-16 bp from 9:30 am Friday)

Dollar/Yuan: $7.1438 +$0.0306

Dollar/Yen: 141.65 +0.77 yen

Dollar/Euro: $1.0959 -$0.0088

Dollar Index: 102.11 +0.78

Gold: $2075.30 +$3.50

Bitcoin: $45,129 +1529

Crude Oil: $71.54 -$0.11

DJIA: 37,688 -1

NASDAQ: 14,793 -218

S&P 500: 4743 -27

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.