CHM Blog

Crude oil on another spike higher this morning on comments from Secretary of State Antony Blinken said yesterday the Biden administration and its allies are discussing an embargo of Russian oil in response to the Ukraine invasion. Shell oil bucked the tide by buying a cargo of Russian oil, getting huge back lashes around the world. Shell, for its part, said in a statement on Saturday that it bought the Russian crude after “intense talks with governments and continue to follow their guidance around this issue of security of supply.” Germany is opposed to a total embargo of Russian oil; German Chancellor Olaf Scholz on Monday poured cold water on the idea of cutting off Russian oil and gas in the near term.

Last night equity markets were under pressure, and still are. Inflation is increasing rapidly, more than what was expected just a few weeks ago. Economists at Barclays Plc and JPMorgan Chase & Co are among those lowering forecasts for global growth and raising them for consumer prices. Both expect inflation to be a percentage point higher than their prior projections. The International Monetary Fund is warning of “very serious” economic consequences from the war. Goldman Sachs Group Inc. analysts estimate a sustained $20 shock in the oil price will lower gross domestic product by 0.6% in the euro area and 0.3% in both the U.S. and China.

At 9:30 am ET the DJIA recovered a lot of the weakness last night. The DJIA started -126, NASDAQ +12, S&P -9. 10 yr. at 9:30 am 1.79% +6 bps. FNMA 3.5 30 yr. coupon -25 bps from Friday’s close and -27 bps from 9:30 am Friday.

Thursday Feb CPI, another inflation look, is expected to have increased from January. The Russian war on Ukraine is the predominant influence now for financial markets. Putin holds there will be no ending it until Ukraine agrees to all of his demands, mostly agreeing to disarm.

Technically the 10 yr. note if finding support at 1.70%, it hasn’t fallen below that since early 2022. Technicals are important but these days emotions and views of the war are more important.

10 yr note: 1.78% +5 bp

5 yr note: 1.68% +4 bp

2 Yr note: 1.53% +5 bp

30 yr bond: 2.16% unch

Libor Rates: 1 mo 0.311%; 3 mo 0.610%; 6 mo 0.939%; 1 yr 1.53% (3/4/22)

30 yr FNMA 3.5: @9:30 102.61 -25 bp (-27 bp from 9:30 am Friday)

30 yr GNMA 3.0: @9:30 101.47 -20 bp (-23 bp from 9:30 am Friday)

Dollar/Yuan: $6.3190 +$0.0013

Dollar/Yen: 115.28 +0.45 yen

Dollar/Euro: $1.0896 -$0.0039

Dollar Index: 98.88 +0.23

Gold: $1984.20 +$17.60 (high $2005.00 this morning)

Bitcoin: 38,980 +73

Crude Oil: $116.68 +$1.00 (the high overnight $130.00)

DJIA: 33,302 -313

NASDAQ: 13,203 -111

S&P 500: 4291 -38

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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