March 7th, 2023 9:07 AM by Richard Sardella MLO.100007700/NMLS 233568
This morning the 10 opened down 3 bps to 3.93%, MBS prices at 9 am ET 8 bps better than yesterday, yesterday by the end of the session MBS prices were essentially unchanged.
How will Powell frame the Fed, inflation, and the Fed’s economic outlook? Always critical when the Fed Chair testifies, this time maybe even more so. Recently the idea of another 50 bp increase in a couple of weeks at the FOMC meeting has gained momentum. Triggered by Jan employment data much stronger than forecast, the estimate for NFP jobs in Jan was 185K, as reported +517, private jobs expected 170K as reported 443K. Most Fed officials that have spoken since the beginning of the month have held to the view the Fed will keep on going with rate increases until the job is done, getting inflation back to 2.0%. Powell is likely to caution that strong economic activity this year could lead U.S. central bank officials to raise interest rates more than they expected.
Are jobs increasing? The data in January sure indicated that is the case; on Friday the Feb employment data, it is highly possible the huge job gains will be revised lower. It isn’t difficult to find a stat that confirms one’s view. The key to statistics is you can make them out to fit your focus.
At 9:30 am the DJIA opened -11, NASDAQ -3, S&P -2. 10 year 3.96% unchanged. FNMA 6.0 30 year coupon at 9:30 am +3 bps from yesterday and +3 bps from 9:30 am yesterday; the 5.5 coupon +3 bps and -5 bp from 9:30 am yesterday.
At 1 pm Treasury will auction $40B of 3 year notes.
Yesterday we noted that consumers are increasingly using credit cards after spending the pandemic largesse. This afternoon at 3 pm the Jan consumer credit data will be released, we want to focus on revolving credit in the data, how deep consumers may be sinking using very high interest rate credit cards. Overall consumer credit expected at +$26.4B from $11.6B in Dec.
PRICES @ 10:00 AM
10 yr note: 3.96% unch
5 yr note: 4.25% unch
2 Yr note: 4.89% -1 bp
30 yr bond: 3.90% unch
Libor Rates: 1 mo 4.711%; 3 mo 5.008%; 6 mo 5.328%; 1 yr 5.691% (3/6/23)
30 yr FNMA 6.0: @9:30 am 101.03 +3 bp (-3 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 99.64 +3 bp (-5 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 100.25 -3 bp (-8 bp from 9:30 am yesterday)
Dollar/Yuan: $6.9452 +$0.0151
Dollar/Yen: 136.25 +0.33 yen
Dollar/Euro: $1.0644 -$0.0041
Dollar Index: 104.66 +0.31
Gold: $1835.00 -$19.60
Bitcoin: 22.342 -59
Crude Oil: $79.92 -$0.54
DJIA: 33,269 -163
NASDAQ: 11,606 -69
S&P 500: 4025 -24
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.