CHM Blog

The 10 year note unchanged from yesterday, MBS prices lower to begin. Early this morning the NFIB small business optimism at 91.9 with estimates at 90.6, not a data point that gets focus. Later today at 1 pm ET Treasury will auction $52B of 3 year notes beginning this week’s borrowing, tomorrow $37B of 10s will get attention.

Last night Fed Governor Michelle Bowman: “Should inflation continue to fall closer to our 2% goal over time, it will eventually become appropriate to begin the process of lowering our policy rate to prevent policy from becoming overly restrictive.” She also said there was a risk that the recent easing in financial conditions may deliver a reacceleration of growth that may cause inflation to reaccelerate.

According to CMS FedWatch 95.3% do not expect the Fed to do anything on rates when the FOMC meets on Jan 31st. The chances of at least a 25 basis point rate cut by the subsequent meeting in March is priced at 60%, down from 79% a week ago.

At 9:30 am the DJIA opened -243 after increasing 217 yesterday, NASDAQ -87 from +319. The FNMA 6.0 30 year coupon at 9:30 am -1 bps from yesterday and -9 bp from 9:30 am yesterday.

The estimates for core CPI on Thursday; and it is the core that is the focus; month/month +0.2% from +0.3%, year/year 3.8% from 4.0%. Overall CPI expected +0.2% month/month from +0.1%, year/year +3.2% from 3.1%. The expectations for inflation to slow is supporting rates, recession concerns increasing also acting as a support. On the other side rates have declined too much and remain too low. The decline in rates from late October has discounted rate cuts from the Fed, more decline in rates is now data dependent that must support the reasons for the decline in rates.

Expect a quiet trade day. Near term technicals bearish. With inflation data on Thursday and Friday markets should remain in narrow ranges.

PRICES @ 10:00 AM

10 year note: 4.00% -2 bp

5 year note: 3.97% -2 bp

2 year note: 4.36% -2 bp

30 year bond: 4.17% -3 bp

30 year FNMA 6.0: @9:30 am 101.10 -13 bp (-9 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.16 -9 bp (-8 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.31 -6 bp (-2 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1579 unch

Dollar/Yen: 143.89 -0.34 yen

Dollar/Euro: $1.0945 -$0.0006

Dollar Index: 102.36 +0.16

Gold: $2,041.10 +$7.60

Bitcoin: 46,684 -466

Crude Oil: $71.60 +$0.83

DJIA: 37,422 -261

NASDAQ: 14,756 -87

S&P 500: 4738 -25

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.