CHM Blog

June PCE overall month/month +0.3% as expected, year/year overall +2.3% better than 2.5% forecasts. Core PCE month/month +0.3% as expected, year/year 2.4% against 2.7% forecasts. Year/year May core revised from +2.7% to 2.8%. Inflation the biggest increase in June in four months, prior readings for both May and April were also raised based on new information. Although higher at current levels the Fed could have lowered rates, the divided Fed is choosing to wait until more inflation data prior to the September FOMC meeting on the 17th.

June personal income thought to be +0.2% month/month increased 0.3%; personal spending estimates at 0.4% reported at 0.3% month/month.

Weekly jobless claims estimates +225K reported at 218K +1K from the prior week. Continuing claims were unchanged from the prior week's downwardly revised count at 1,946,000, a slight pullback from the 2021-highs of over 1,960,000 from last month. The data reflected more evidence of a relatively robust labor backdrop.

Q2 employment cost index expected +0.8% increased to 0.9%.

Taken together the 8:30 am data didn’t move markets on the initial reaction; the 10 year note at 4.34%, MBS prices +12 bps unchanged from before 8:30 am.

Treasury Secretary Bessent on CNBC this morning on a China trade deal saying, “I believe that we have the makings of a deal, there’s still a few technical details to be worked out on the Chinese side between us. I’m confident that it will be done, but it’s not 100% done.” It is his opinion. Tomorrow is the deadline for tariffs that will take effect.

At 9:30 am the DJIA opened +32, NASDAQ +302, S&P +44. 10 year at 9:30 am 4.35% -3 bps. FNMA 6.0 30 year coupon +7 bps from yesterday’s close and +1 bp from 9:30 am yesterday.

At 9:45 am the last of today’s data, July Chicago purchasing managers index that has been in contraction for a year (under 50), the index expected at 42.0 from 40.4 in June reported at 47.1.

No more data today, unless more trade deals or any unexpected news bond markets should remain little changed from present levels. Key data still out there with July employment data tomorrow and July consumer sentiment index.

PRICES @ 10:00 AM

10 year note: 4.35% -3 bp

5 year note: 3.95% -2 bp

2 year note: 3.94% -1 bp

30 year bond: 4.88% -3 bp

30 year FNMA 6.0: @9:30 am 101.41 +7 bp (+1 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 103.15 +1 bp (+2 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 101.42 +9 bp (unch from 9:30 am yesterday)

Dollar/Yen: 150.45 +0.93 yen

Dollar/Euro: $1.1412 +$0.0008

Dollar Index: 100.04 +0.22

Gold: $3,359.70 +$6.90

Bitcoin: 118,383 +1450

Crude Oil: $68.29 -$0.71

DJIA: 44,594 +133

NASDAQ: 21,401 +271

S&P 500: 6417 +54

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.

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