March 23rd, 2022 9:48 AM by Richard Sardella MLO.100007700/NMLS 233568
Last night the 10 yr. note rate increased to 2.41% +4 bps from the 5 pm ET close yesterday, by 8:30 am this morning back to 2.37% -1 bp from yesterday. MBS prices began generally unchanged from yesterday.
Not much in the way of market news that we didn’t know yesterday; Cleveland Fed President Mester (FOMC voter) joined the list of those calling for more increases in the FF rate, saying in a speech last night that she thinks the fed funds rate should move to 2.5% this year and that more increases could follow next year, the current FF rate 0.50%. The Bloomberg Global Aggregate Index, a benchmark for government and corporate debt total returns, has fallen 11% from a high in January 2021. That’s the biggest decline from a peak in data stretching back to 1990, surpassing a 10.8% drawdown during the financial crisis in 2008. It equates to a drop in the index market value of about $2.6 trillion, worse than about $2 trillion in 2008.
Markets coming around to realizing the near-term spike in interest rates has the rate markets looking at very oversold conditions. As we noted yesterday, we expect a bounce or at least consolidation after the 10 yr. note yield after increasing 67 bps in the last two weeks. It’s the same situation in the equity markets, after a record week last week and more yesterday we look for day traders to slow and take profits; to much in too short a time and the economic outlook going to be fuzzy now as interest rates increase. The Fed tightening will slow economic growth. Yesterday, Carl Icahn, one of the most successful investors in the eyes of the market observers issued a warning that he sees recession coming and even possibly depression; just one man’s view, but he carries a lot of respect. One thing is clear, so far, the equity markets haven’t factored the impact of higher rates for the economic outlook. Rising inflationary pressure around the world is fueling concerns about the ability of the global economy to weather any sustained period of higher financing costs.
At 9:30 am the DJIA opened -150, ASDAQ -119, S&P -22. 10 yr. 2.35% -3 bps after trading at 2.41% last night. FNMA 4.0 30 yr. coupon at 9:30 am +16 bps and +30 bp from 9:30 am yesterday.
This morning weekly MBA mortgage apps last week, -8.1%, purchase apps -14%, re-finances -2.0%.
At 10 am Feb new home sales expected at 810K up from 801K in Jan, as released sales declined to 772K, -2.0%. Details this afternoon.
At 1 pm this afternoon Treasury will sell $16B of 20 yr. bonds.
President Biden and European allies are gathering for meetings Thursday to project a united front as they announce new measures to target Russian President Vladimir Putin’s war in Ukraine and escalating attacks on civilians. Mr. Biden, who is scheduled to land in Brussels today, plans to meet with leaders of the North Atlantic Treaty Organization, the European Union and the Group of Seven leading industrial countries to discuss deterrence efforts, humanitarian relief and the campaign of sanctions against Russia.
PRICES @ 10:00 AM
10 yr note: 2.35% -3 bp
5 yr note: 2.35% -5 bp
2 Yr note: 2.14% -3 bp
30 yr bond: 2.57% -3 bp
Libor Rates: 1 mo 0.455%; 3 mo 0.954%; 6 mo 1.285%; 1 yr 2.013% (3/22/22)
30 yr FNMA 3.5: @9:30 am 100.19 +23 bp (+37 bp from 9:30 am yesterday)
30 yr FNMA 4.0: @9:30 am 102.28 +16 bp (+30 bp from 9:30 am yesterday)
30 yr GNMA 3.5: @9:30 am 100.66 +16 bp (+25 bp from 9:30 am yesterday)
Dollar/Yuan: $6.3724 +$0.0060
Dollar/Yen: 120.72 -0.09 yen
Dollar/Euro: $1.0969 -$0.0061
Dollar Index: 98.85 +0.35
Gold: $1932.80 +$11.30
Bitcoin: 42,004 -562
Crude Oil: $114.11 +$2.35
DJIA: 34,554 -253
NASDAQ: 13,976 -132
S&P 500: 4481 -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.