CHM Blog

The 10 year note at 9 am ET 3.71% +2 bps since yesterday’s close the 10 has traded in a 5 bp range. Quiet with no economic releases and no Fed speak now until the FOMC policy statement and Powell’s press conference next Wednesday. Stock indexes in futures trading slightly lower. MBS prices 8 bps lower than yesterday.

The Fed will pause at the FOMC meeting next week, completely discounted in current levels, markets now looking to July for the next hike. Unlike the Fed pause, the ECB is expected to increase rates next week. Christine Lagarde said inflation pressures remain powerful. “Price pressures remain strong,” “Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target and will be kept at those levels for as long as necessary” Like the Fed, ECB is married to 2.0% inflation, a level that appears elusive as inflation remains stubbornly high.

Debating a recession or not? Pick your view, markets are as unsure as we have seen in quite a while. If the Fed and ECB continue to drive rates higher to drop inflation to 2.0% it is difficult to ignore a recession. Recent data has been weaker than forecasts (May ISM services sector yesterday), but employment remains strong, and wages continue to hold at present levels (last Friday’s May employment data). This week the only data point left is on Thursday when weekly jobless claims are released, current expectations are for claims at 235K from 232K last week.

At 9:30 am the DJIA opened -37, NASDAQ -40, S&P -6. 10 year 3.70% +1 bp. FNMA 6.0 30 year coupon -11 bps and +5 bps from 9:30 am yesterday.

PRICES @ 10:00 AM

10 year note: 3.73% +4 bp

5 year note: 3.87% +6 bp

2 year note: 4.55% +10 bp

30 year bond: 3.92% +3 bp

Libor Rates: 1 month 5.191%; 3 month 5.509%; 6 month 5.663%; 1 year 5.780% (6/5/23)

30 year FNMA 6.0: @9:30 am 101.00 -11 bp (+5 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.83 -3 bp (+20 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.84 -6 bp (+15 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1222 +$0.0169

Dollar/Yen: 139.79 +0.21 yen

Dollar/Euro: $1.0675 -$0.0039

Dollar Index: 104.26 +0.26

Gold: $1972.90 -$1.40

Bitcoin: 25,660 +24

Crude Oil: $71.05 -$1.10

DJIA: 33,510 -53

NASDAQ: 13,204 -25

S&P 500: 4270 -4

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.

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