March 9th, 2023 9:32 AM by Richard Sardella MLO.100007700/NMLS 233568
Weekly claims were expected at 195K, as released claims increased 211K from 190K the prior week, up 21K, the four-week average 197K up from 193K. Claims being higher than expectations boosted to 10 year from 4.01% to 3.98%. The sensitive 2 year note declined 6 bps to 5.00%. More claims, what the Fed wants to see. By 9 am the 10 at 3.97% -2 bps and MBS prices +10 bps; stock indexes were a little better.
Over the last two days Powell made it very clear the Fed won’t back down and the potential for a 50 bp FF increase in two weeks is on the table. Will the Fed do it? Tomorrow’s Feb employment report will go a long way to clear the air. And of course there is always something ahead; next week PPI and CPI together with employment should set the table for how the Fed will react. January job growth at 517K, three times the forecasts, what we want to see is a downward revision for both NFP and private jobs. The focus tomorrow will be on three key indicators: payrolls, wage gains and the unemployment rate. Powell softened his tone yesterday saying that no decision has been made on the size of a rate increase in March and the central bank isn’t seeking to cause a recession.
The Bank of Japan begins its two-day meeting today, the consensus is there will be no change in its policy. Most BOJ watchers don’t see moving toward tightening, as it will risk turbo-charging speculation over more change to follow when a new governor is set to take over at the bank in a month’s time.
At 9:30 am the DJIA opened +134, NASDAQ +12, S&P +8. 10 year 3.97% -2 bp. FNMA 6.0 30 year coupon +8 bps and -14 bps from 9:30 am yesterday.
Nothing on the calendar today except Treasury will auction $18B of 30s (29 year 11 month). The rest of the day focus will be on Feb employment tomorrow.
As was evident with the Jan employment data, the estimates and reality can be two different situations. Jobs exploded in Jan, the current thoughts today are job growth at 223K from 517K, private jobs 213K from 443k in January. We expect a downward revision to January data tomorrow, average hourly earnings year/year expected at 4.7% from 4.4% in January.
Tomorrow expect a strong reaction to the employment data after Powell’s testimony and the strength in January with huge job gains and inflation increased. The report caught traders and investors flat footed. Tomorrow will likely be the same, the direction data dependent. There were seasonal adjustments to the Jan data that may have distorted strong job growth, not likely to be repeated in Feb.
PRICES @ 10:00 AM
10 yr note: 3.96% -3 bp
5 yr note: 4.27% -9 bp
2 Yr note: 4.97% -10 bp
30 yr bond: 3.88% unch
Libor Rates: 1 mo 4.76%; 3 mo 5.12%; 6 mo 5.47%; 1 yr 5.81% (3/8/23)
30 yr FNMA 6.0: @9:30 am 100.69 +8 bp (-14 bp from 9:30 am yesterday)
30 yr FNMA 5.5: @9:30 am 99.23 +6 bp (-19 bp from 9:30 am yesterday)
30 yr GNMA 5.5: @9:30 am 99.86 +8 bp (-11 bp from 9:30 am yesterday)
Dollar/Yuan: $6.9591 +$0.0074
Dollar/Yen: 136.19 -1.17 yen
Dollar/Euro: $1.0580 +$0.0037
Dollar Index: 105.26 -0.40
Gold: $1833.20 +$14.60
Bitcoin: 21,711 -295
Crude Oil: $77.67 +$1.10
DJIA: 32,917 +119
NASDAQ: 11,651 +75
S&P 500: 4011 +19
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.