CHM Blog

February CPI showed slowing in consumer inflation this morning. Core CPI, less food and energy expected at +0.3% month/month dropped to +0.2% and down from 0.4% in January; year/year core +3.1% down from 3.3% in January. Overall CPI month/month +0.2% down from 0.5%, year/year overall +2.8% from 3.0%. Although the headlines were positive markets didn’t improve on the initial reaction to the report. The headline and core inflation rates fell more than expected during February, raising hopes of disinflation. The headlines were favorable but the guts not so much; the shelter index, accounting for over two thirds of the total 12-month increase, rose 4.2% over the last year, the smallest 12-month increase since December 2021, down from 4.4% in January. Other indexes saw increases including motor vehicle insurance (+11.1%), medical care (+2.9%), recreation (+1.8%), and education (+3.7%).

Weekly MBA mortgage applications increased last week. The composite index increased 11.2% from the prior week, purchases increased 7.0% while re-finances increased 16.2%.

At 9 am ET the 10 year note increased 5 bps to 4.34%, the 2 year note up 6 bps to 4.01%. Prior to the 8:30 am CPI the 10 year note traded down 2 bps before rolling over to higher rates. The stock indexes prior to the 9:30 am open were slightly better after another down day yesterday, at 9 am the DJIA +312, NASDAQ +320, S&P +66.

At 9:30 am the DJIA opened +287, NASDAQ +326, S&P +65. 10 at 9:30 am 4.32% +4 bp. FNMA 6.0 30 year coupon at 9:30 am -3 bps from yesterday’s close and -13 bps from 9:30 am yesterday.

At 1 pm Treasury will auction $39B of 10 year notes.

At 2 pm Treasury will release the February budget statement; in January the red ink was -$128.6B.

Tariff wars are increasing, with Europe imposing a counter-tariff on 26 billion euros ($28 billion) worth of U.S. goods from April in response, Canada, and the US battling with tariffs and counter tariffs from China. The wars are escalating in such a rapid manner investors and traders finding it difficult to track, changing almost daily.

The lower inflation read on the headlines didn’t push rates lower as would be expected, the specifics were not that encouraging. Still seeing a lot of comments that markets expect the Fed to lower rates later this year to counter the slowing economic outlook; as for the CPI, it was expected to slow but markets more focused on the economy as stocks continue to slip.

PRICES @ 10:00 AM

10 year note: 4.31% +3 bp

5 year note: 4.07% +4 bp

2 year note: 3.98% +4 bp

30 year bond: 4.62% +2 bp

30 year FNMA 6.0: @9:30 am 101.32 -3 bp (-13 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.86 -1 bp (-19 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 101.37 +3 bp (+5 bp from 9:30 am yesterday)

Dollar/Yen: 148.84 +1.07 yen

Dollar/Euro: $1.0888 -$0.0032

Dollar Index: 103.72 -0.12

Gold: $2,916.70 -$4.20

Bitcoin: 83,469 +362

Crude Oil: $67.42 +$1.17

DJIA: 41,293 -141

NASDAQ: 17,660 +213

S&P 500: 5602 +31

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.