CHM Blog

At 8 am ET the 10 year -1 bp to 4.28%, MBS prices +6 bps from yesterday.

8:30 data:

Weekly jobless claims thought to be unchanged from the prior week at 245K fell to 236K, -10k, less than thought but still claims are above this year's average, suggesting some softening in the US labor market. Continuing claims, watched closely by traders continued to increase, up 37K to 1.974 million against forests of 1.950 million the highest since November 2021. Initial claims filed by federal government employees, which have been under scrutiny following recent dismissals by the Department of Government Efficiency (DOGE), fell by 55 to 480 in the second week of June.

Q1 GDP was weaker than thought at -0.2% reported in the second release, the final release this morning -0.5%, a huge revision; the quarter the first quarterly decline in three years that was already a fact but the revision accentuates the economy was softer than already thought. The Q1 personal consumption expenditures year/year declined from +1.2% in Q4 to +0.5%.

May durable goods orders expected +7.0% jumped to 16.4%, ex-transportation orders estimated at +0.1% increased 0.5%, core capital goods month/month increased 1.7% from -1.4% in April. New orders for manufactured goods in the US jumped by 16.4% over a month to $343.6B in May, the largest month/month increase since July 2014. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose by 1.7% in May, following a revised 1.4% advance in April and surpassing market estimates of a 0.1% increase.

The President continued his criticism of Powell for holding rates high, while Powell in his testimony the last two days remains willing to wait for more evidence of inflation and or rising unemployment, unwilling to bend believing there isn’t enough evidence how the tariffs will impact the economy. Meanwhile at least two Fed governors have recently come out that cuts should happen sooner than the Fed is presently contemplating. Other central banks have slashed interest rates by as much as 100 bps over the last year. Markets are now increasing the odds of a rate cut next month at the July 30th FOMC meeting. The president isn’t likely to fire Powell whose term is up next May but is threatening to name Powell’s successor well before Powell’s tenure is up, encouraging the idea rates may decline more quickly than currently anticipated.

At 9:30 am the DJIA opened +158, NASDAQ +87, S&P +24. 10 year at 9:30 am 4.27% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +7 bp from yesterday and +13 bp from 9:30 am yesterday.

At 1 pm Treasury will auction $44B of 7 year notes; both yesterday’s 5 year and Tuesday’s 2 year auctions were less than stellar but reasonable.

The 10 year note yield broke below its 200 day average in the futures market today. The remainder of the day may be quiet; tomorrow PCE inflation data that could break the balance on yes or no for rate cut next month.

PRICES @ 10:00 AM

10 year note: 4.26% -3 bp

5 year note: 3.81% -4 bp

2 year note: 3.74% -5 bp

30 year bond: 4.82% -2 bp

30 year FNMA 6.0: @9:30 am 101.52 +7 bp (+13 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 103.21 +6 bp (+11 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 101.39 +3 bp (+16 bp from 9:30 am yesterday)

Dollar/Yen: 144.29 -0.97 yen

Dollar/Euro: $1.1719 +$0.0058

Dollar Index: 97.23 -0.45

Gold: $3,323.90 -$19.20

Bitcoin: 107,246 -572

Crude Oil: $65.56 +$0.64

DJIA: 43,154 +172

NASDAQ: 20,049 +75

S&P 500: 6119 +27

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.