CHM Blog

At 8 am ET the 10 yr. 3.20% +7 bps, MBS prices -27 bps from Friday. Stock indexes early were generally unchanged.

An important week, this week with inflation data released on Thursday (May PCE) and Treasury borrowing $133B of 2s, 5s and 7s starting later this morning.

This morning at 8:30 am May durable goods orders were better than forecasts, +0.7% on estimates of 0.1%, ex transportation +0.7% against +0.4% estimates, core capital goods increased 0.5% compared to +0.3% in April.

G-7 meeting in Austria; expected to agree to start work on a mechanism to cap the purchase price of Russian oil, with the U.S. also announcing a new round of military aid for Ukraine and sanctions against Moscow, Biden administration officials said Monday. It would create a buyers’ cartel of Western nations and their allies, the official said. There is no timeline yet on when the details will be worked out. The issue was discussed by G-7 leaders on Sunday. “The goal here is to starve Russia, starve [Russian President Vladimir] Putin of his main source of cash and force down the price of Russian oil to help blunt the impact of Putin’s war at the pump,” the official said. The U.S. will announce it is providing Ukraine with an advanced medium- to long-range surface-to-air missile defense system for Ukraine, another senior administration official said.

The two keys this week, Powell speaking on Wednesday and on Thursday the first look at inflation since the FOMC meeting and the Fed’s favorite release, May PCE. The estimates are for increases in the overall PCE but the core yr./yr. down to 4.8% from 4.9%. Any less than forecasts will support the slight new market thoughts that the Fed won’t increase rates at the amount that had been expected, 350 bps this year.

At 9:30 am the FJIA opened +55, NASDAQ +59, S&P +15. 10 yr. note at 9:30 am 3.20% +7 bps. FNMA 5.0 30 yr. coupon at 9:30 am -16 bps from Friday and down 20 bps from 9:30 am Friday.

At 10 am May pending home sales, expected -2.5%, as reported +0.7%.

At 11:30 am $46B of 2s, at 1 pm $47B of 5s will be auctioned.

Inflation and recession dominate markets now, about an even split between two perspectives. No recession and that the Fed will be less aggressive in increasing rates later this year; the other thought, inflation will not dissipate from current levels through this year and when the Q2 GDP is released in a month from now it will be on the positive side after Q1 fell 1.5%. The last release of the Atlanta Fed GDPNow was released 10 days ago and was flat compared to the Blue Chip estimates that are forecasting +4% growth. Later today the GDPNow will be updated considering data since June 16th, the last release.

The 10 is still trading under its 20 day average and the 9 day RSI is at neutral, not bearish or bullish. The 10 has improved from early trade, +3 bps at 10 after being up 7 bps at 8 am.

PRICES @ 10:00 AM

S&P 500: 3900 -11

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.

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