CHM Blog

Feb PPI this morning added more evidence that inflation is continuing to increase, yr./yr. PPI at 10.0% up from 9.7% in Jan; core PPI (ex food and energy) increased to 8.4% from 8.3% in Jan. However, when trade services are included yr./yr. PPI declined to 6.6% from 6.9% in Jan. The takeaway, inflation is still increasing, and the outlook is that it will continue to increase, some expecting inflation will reach 10% before backing off later this year.

Selling was surprisingly strong yesterday in crude, gold and the bond market. This morning some rebound. Yesterday the 10 yr. yield increased 14 bps and MBS prices were down 70 bps. The decline in oil and gold was somewhat expected as the fear over Ukraine didn’t have anything new over the weekend, but the increase in interest rates somewhat a surprise with the FOMC policy statement tomorrow afternoon. In one view it could have signaled the Fed would increase the FF rate by 50 bps, on the other the consensus is still for a 25 bp increase. Crude fell $8.00 yesterday and early this morning down another $7.00, the decline in oil would suggest that less inflation worries are taking hold. The fall in gold prices suggest safety trades are ebbing.

At 9:30 am the DJIA opened +225, NASDAQ +120, S&P +32. 10 yr. at 9:30 am 2.08% down 6 bps. FNMA 3.5 30 yr. coupon at 9:30 am +20 bps and -9 bps from 9:30 am yesterday (on the day yesterday down 73 bps.)

PRICES @ 10:00 AM

10 yr note: 2.09% -5 bp

5 yr note: 2.03% -6 bp

2 Yr note: 1.80% -7 bp

30 yr bond: 2.43% -5 bp

Libor Rates: 1 mo 0.430%; 3 mo 0.884%; 6 mo 1.175%; 1 yr 1.657% (3/14/22)

30 yr FNMA 3.5: 101.22 +20 bp (-9 bp from 9:30 am yesterday)

30 yr FNMA 4.0: 103.27 +20 bp (-12 bp from 9:30 am yesterday)

30 yr GNMA 3.5: 102.11 +17 p (+9 bp from 9:30 am yesterday)

Dollar/Yuan: $6.3756 +$0.0102

Dollar/Yen: 117.97 -0.22 yen

Dollar/Euro: $1.0986 +$0.0045

Dollar Index: 98.78 -0.22

Gold: $1927.10 -$33.70 (high last week $2075.00)

Bitcoin: 38.601 -154

Crude Oil: $96.34 -$6.75 (high last week $130.00)

DJIA: 33,166 +221

NASDAQ: 12,688 +107

S&P 500: 4205 +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.

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