CHM Blog

April CPI at 8:30 am ET this morning, mostly right on forecasts. CPI month/month +0.4% as expected, year/year +4.9% down from 5.0% and against forecasts of 5.0%. Core CPI +0.4% as expected, year/year 5.5% as expected and down from 5.6% in March. The data being right on what markets had been expecting sent the 10 year note down to 3.46% -6 bps from yesterday and the immediate reaction pushed MBS prices up 20 bps. The 2 year note initially dropped 8 bps to 3.96%. Inflation slowing, albeit not much but any slowing revs up the idea the Fed may pause its rate increases. On the report the stock indexes improved with traders momentarily betting a little on a Fed pause.

At 9:30 am the DJIA opened +203, NASDAQ +130, S&P +35. 10 year 3.48% -4 bps. FNMA 6.0 30 year coupon +14 bps and +14 bps from 9:30 am yesterday, the 5.5 coupon +16 bps and +16 bps from 9:30 am yesterday.

This afternoon at 1 pm Treasury will auction $35B of new 10 year notes; while it can’t be a direct comparison yesterday saw one of the strongest 3 year note auctions in a very long time.

As expected, no progress on the debt ceiling. The ceiling will get solved but politicians never agree on anything until the clock ticks to midnight. Bloomberg reporting this morning current and former leaders of the Treasury Borrowing Advisory Committee, which includes executives from JPMorgan and Goldman Sachs, sent a letter to Janet Yellen calling for an urgent increase to the debt limit and permanent solution, saying the standoff was costing financial firms time and effort in contingency planning. Goldman Sachs co-head of global financing, Beth Hammack, also cited “the real risk to the US dollar” in an interview with Bloomberg TV on Tuesday.

April CPI confirmed inflation is slowing (4.9% from 5.0% in March) was a 2 year low, European Central Bank President Lagarde said in an interview that there is more ground to cover in the central bank's fight against inflation while policymaker Schnabel also said that more must be done to slow inflation. CPI more important to traders than PPI that will be reported tomorrow, nevertheless the anticipation will keep the 10 year and MBSs in a tight range through the day. PPI month/month expected +0.3% from -0.5% in March, year/year 2.5% from 2.7%; core PPI month/month +0.2% from -0.1%, year/year 3.3% from 3.4%. The estimates compare nicely with today’s CPI. Also tomorrow, weekly jobless claims expected at 245K from 242K the week before.

PRICES @ 10:00 AM

10 year note: 3.45% -7 bp

5 year note: 3.40% -10 bp

2 year note: 3.95% -8 bp

30 year bond: 3.80% -4 bp

Libor Rates: 1 month 5.106%; 3 month 5.339%; 6 month 5.340%; 1 year 5.298% (5/9/23)

30 year FNMA 6.0: @9:30 am 101.72 +14 bp (+16 bp from 9:30 am yesterday; at 10 am +25 bp)

30 year FNMA 5.5: @9:30 am 100.69 +16 bp (+16 bp from 9:30 am yesterday; at 10 am +28 bp)

30 year GNMA 5.5: @9:30 am 100.45 +19 bp (+26 bp from 9:30 am yesterday)

Dollar/Yuan: $6.9244 +$0.0039

Dollar/Yen: 134.54 -0.70 yen

Dollar/Euro: $1.0982 +$0.0021

Dollar Index: 101.40 -0.21

Gold: $2043.40 +$0.50

Bitcoin: 28,216 +546

Crude Oil: $72.76 -$0.94

DJIA: 33,610 +48

NASDAQ: 12,310 +130

S&P 500: 4143 +23

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.