CHM Blog

Daily Market Analysis July 20, 2022

July 20th, 2022 9:11 AM by Richard Sardella MLO.100007700/NMLS 233568


Daily Market Analysis

US equity markets had a stellar day yesterday pushing interest rates higher and MBS prices a little lower. This morning the stock indexes started weaker; interest rates declined. Can’t put two days together as investors await the FOMC meeting next Wednesday. At 8:30 am ET this morning the 10 yr. note at 2.95% -7 bps and MBS prices 9 bps better.

US inflation at 9.1% based on June CPI, the UK inflation +9.4%, the highest since 1982 when UK inflation was double digits. The US inflation isn’t quite that onerous but also hitting long term highs, (in 1982 30 yr. mortgage rates hit 17% and construction money at 25%). Volcker stepped in and rapidly increased the FF rate, now we have Powell, talking tough but Wall Street still dictates. A week ago, the outlook had increased for a 100 bp increase next week, but now back to 75 bps with most firms now agreeing on 75. The Fed does not like to surprise markets, not good politics for the Fed.

The Fed is prepared to let unemployment rate increase as it gets a handle on inflation; we will see what the policy statement and Powell’s press conference has to say. In the equity markets there is a battle brewing now, has the bottom already happened or is the more selling to come? You can find any answer you want pending who you believe. BofA survey shows that investors have already thrown in the towel. Sanford Bernstein analysts say “We have not yet seen capitulation in outflows from equity funds,” Bank of America’s July global fund manager survey released yesterday showed that full capitulation had been reached after investor allocation to stocks plunged to the lowest since October 2008, while exposure to risk assets dropped to levels not seen even during the global financial crisis. And the debate will continue.

At 9:30 am the DJIA opened -31, NASDAQ +1, S&P -3. 10 yr. at 9:30 am 2.97% -6 bps. FNMA 4.5 30 yr. coupon at 9:30 am +14 bps and +7 bps from 9:30 am yesterday.

At 10 am June existing home sales, expected at 5.36 mil, as reported 5.12 mil down 5.4% from May and down 14.2% yr./yr.

Over the last 10 sessions the 10 yr. note hasn’t moved, in a very narrow range of 10 bps; likely that will continue until next Wednesday.

PRICES @ 10:00 AM

10 yr note: 2.98% -4 bp

5 yr note: 3.10% -5 bp

2 Yr note: 3.19% -5 bp

30 yr bond: 3.14% -4 bp

Libor Rates: 1 mo 2.161%; 3 mo 2.731%; 6 mo 3.299%; 1 yr 3.870% (7/19/22)

30 yr FNMA 5.0: 101.48 +8 bp (+4 bp from 9:03 am yesterday)

30 yr FNMA 4.5: 100.20 +14 bp (+7 bp from 9:30 am yesterday)

30 yr GNMA 4.0: 99.47 +17 bp (-22 bp from 9:30 am yesterday)

Dollar/Yuan: $6.7522 +$0.0072

Dollar/Yen: 138.07 -0.13 yen

Dollar/Euro: $1.0227 unch

Dollar Index: 106.72 +0.04

Gold: $1708.40 -$2.20

Bitcoin: 23,914 +607

Crude Oil: $102.40 -$1.82

DJIA: 31,698 -129

NASDAQ: 11,727 +14

S&P 500: 3927 -10

About Richard Sardella

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.

About This Report And Disclosure Information

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.

Posted by Richard Sardella MLO.100007700/NMLS 233568 on July 20th, 2022 9:11 AM

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