January 3rd, 2023 9:15 AM by Richard Sardella MLO.100007700/NMLS 233568
Happy new year. 10 yr. at 8:30 am ET this morning 3.76% -12 bps from Friday, MBS prices 34 bps higher. Weak manufacturing data overnight, the indexes were all below 50.0, which is indicative of manufacturing activity in a state of contraction.
Two key standouts this week, Dec employment data and the minutes from the Dec FOMC meeting.
The Fed will increase the FF rate 25 bps on Feb 1st, there is no debate about it within markets.
Stock indexes improving a little this morning on China’s recovery and resilience in Europe stoked optimism about the global economy. Europe looking for better growth with higher inflation setting up the ECB to increase its base rate in Feb and March in step with the Fed. European Central Bank President Christine Lagarde indicated borrowing costs will increase again, saying this is required to temper soaring consumer-price growth. While such rate aggression comes just as an economic downturn takes hold in the region, LaGarde highlighted that the “recession we feared is likely to be short-lived and shallow,” citing her institution’s most recent forecasts. Just as the Fed is very concerned about wage increases in the US, Lagarde commented “We must not allow inflationary expectations to become de-anchored or wages to have an inflationary effect,”… “We know wages are increasing, probably at a faster pace than expected, but we must be wary that they do not start fueling inflation.”
At 9:30 am the DJIA opened +71, NASDAQ +91, S&P +17. 10 yr. 3.74% -14 bp. FNMA 5.5 30 yr. coupon at 9:30 am +36 bps from Friday and +27 bps from 9:30 am Friday.
At 9:45 am Dec PMI manufacturing index expected at 46.2, as reported 46.2.
At 10 am Nov construction spending, expected -0.4%, as reported +0.2%.
We don’t look for additional improvement for the 10 yr. note today, likely have seen the low.
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.