CHM Blog

The FOMC meeting begins today. Tomorrow Fed chief Kevin Warsh takes the podium for the first time. The policy statement will be more of the same, concern about inflation and employment. Doubt whether the statement or Warsh will light any new fires, keeping the focus on economic conditions. The cease fire with Iran has, and will continue to have consequences, particularly the price of oil that has edged overall inflation up a little.

Markets have been tilting toward a Fed rate increase later this year, partly driven by the ECB increasing rates for the first time since 2023. US employment still holding well with the BLS reporting huge job increases in May; on inflation the Fed will assess how much the spike in energy prices will filter through the economy. Warsh’s inaugural press conference is highly anticipated for signs of his promised “regime change” in Fed communication and balance-sheet policy.

The Iran signing of the memorandum is scheduled for Friday. Push back about the deal is gaining a little momentum from some European nations and here in the US.

May housing starts and permits; starts fell 15.4% month-on-month, reaching a seasonally adjusted annual rate of 1.177 million, the lowest since May 2020. April revised lower, originally reported at 1.465 mil to 1.392 mil. Multi-family starts plunged 41.6% to 284,000, the lowest since November 2024, while single-family starts slipped 1.9% to an eight-month low of 882,000. Permits expected at 1.427 mil were 1.413 mil, April revised to 1.423 mil from 1.442 mil. Permits for buildings with five or more units fell 3.5% to 474,000, while single-family permits increased 0.6% to 886,000.

May import prices month/month thought to be +1.3%, increased 1.9%, year/year +6.7% against forecasts of 6.0%. Export prices month/month estimates were +1.6%, were less at 1.3%, year/year prices increasing, April revised higher from 8.8% to 9.1%, May +11.2%. The report isn’t good, inflation increasing.

This afternoon at 1 pm Treasury will auction $13B of 20 year bonds.

MBS prices early this morning +9 bps, by 9:30 am back to unchanged ahead of FOMC tomorrow.

This afternoon Treasury will sell $13B of 20 year bonds, no market reaction expected.

PRICES @ 10:00 AM

10 year note: 4.46% -2 bp

5 year note: 4.18% -2 bp

2 year note: 4.08% unch

30 year bond: 4.95% -3 bp

30 year FNMA 5.5: @9:30 am 100.37 +1 bp (unchanged from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 102.14 +1 bp (+2 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.70 +3 bp (+7 bp from 9:30 am yesterday)

Dollar/Yen: 160.35 +0.02 yen

Dollar/Euro: $1.1600 +$0.0009

Dollar Index: 99.63 unch

Gold: $4,359.20 +$7.80

Bitcoin: 66,070 -428

Crude Oil: $77.81 -$2.94

DJIA: 51,874 +203

NASDAQ: 26,761 +77

S&P 500: 7554 unch

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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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.