CHM Blog

Prior to the 8:30 am ET Feb employment report the 10 yr. note rate was down to 1.80% -5 bps from yesterday and MBS prices +11 bps from the close yesterday. News from Ukraine continues to worsen keeping investors looking for safety into treasuries.

Feb employment data this morning. A larger increase in jobs than forecasted, non-farm job growth were expected at 390K, jobs increased 678K. Private jobs thought to have increased 330K increased 654K. The unemployment rate slightly lower, expected at 3.9% from 4.0% in Jan declined to 3.8%. Jobs increased but wages didn’t; average hourly earnings were expected at +0.5%, they were flat, 0.0%; yr./yr. expected +5.8% increased just 5.1%. The labor participation rate unchanged at 62.3% as forecast.

Inflation will continue to increase, driven by energy costs and continued supply chain issues. That was Jerome Powell’s message to the Senate Banking Committee yesterday, but he made it clear the Fed will increase the FF rate by 0.25% on March 16th at the FOMC meeting. The Fed has a real problem, behind the curve already in its fight against inflation and now with Ukraine must move slower than what had been thought so as not to upset markets more than they already are now.

A relentless surge in U.S. inflation reached another four-decade high last month, accelerating to a 7.5% annual rate as strong consumer demand collided with pandemic-related supply disruptions. The Labor Department said the consumer-price index—which measures what consumers pay for goods and services—in January reached its highest level since February 1982, when compared with the same month a year ago.

At 9:30 am the DJIA opened-348, NASDAQ -82, S&P -33. 10 yr. note 1.75% -10 bps. FNMA 3.5 30 yr. coupon +14 bps from yesterday’s close and 44 bps higher than 9:30 am yesterday. Yesterday afternoon MBS prices began to increase although the 10 yr. didn’t lead and didn’t decline; 10 closed yesterday down 3 bps.

Heading into the weekend and Russia continuing to attack, the safety trade is on. Investors still moving into treasuries, not worrying about inflation. Rates likely stay low as long as Russia insists on capturing Kyiv and all of Ukraine.

PRICES @ 10:00 AM

10 yr note: 1.73% -11 bp

5 yr note: 1.63% -10 bp

2 Yr note: 1.47% +7 bp

30 yr bond: 2.14% -9 bp

Libor Rates: 1 mo 0.289%; 3 mo 0.583%; 6 mo 0.890%; 1 yr 1.332% (3/3/22)

30 yr FNMA 3.0: @9:30 101.13 +25 bp (+43 bp from 9:30 yesterday)

30 yr FNMA 3.5: @9:30 102.88 +14 bp (+44 bp from 9:30 yesterday)

30 yr GNMA 3.0: @9:30 101.70 +20 bp (+53 bp from 9:30 yesterday)

Dollar/Yuan: $6.3170 -$0.0030

Dollar/Yen: 115.29 -0.17 yen

Dollar/Euro: $1.0904 -$0.0162

Dollar Index: 98.72 +0.94

Gold: $1961.80 +$25.90

Bitcoin: 40,687 -1,347

Crude Oil: $113.33 +$5.66

DJIA: 33,523 -272

NASDAQ: 13,416 -122

S&P 500: 4324 -39

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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