CHM Blog

The 10 began -3 bp overnight. At 8:30 am ET April retail sales edged the 10 up 1 bps to 3.52%. After two months of declining sales market forecasts were an increase of 0.7%, reported +0.4% and March revised from -1.0% to -0.7%. Excluding vehicles, the forecast was +0.4%, as reported +0.4% and March revised from -0.8% to -0.5%; ex vehicles and gas thought to be +0.2% increased 0.6%. In pre-open trading the stock indexes traded slightly lower.

The debt ceiling still center stage for investors, short term money moving into safety modes as our politicians continue to act as if this a game. Biden said yesterday he was optimistic, Treasury Secretary Janet Yellen warned that the US is already paying a price for its failure to raise the federal debt limit and reiterated her department may run out of cash by early June.

BofA out with a poll, fund managers increasingly believing a slowing economic outlook. The sentiment among fund managers deteriorated to the most bearish this year, with 65% of survey participants now expecting a weaker economy but expect only a small contraction. Cash levels rose to 5.6% in May, exposure to equities also climbed to the highest this year, while bond allocations are now the biggest since 2009. BofA’s survey was conducted May 5-11, spanning 251 participants with $666B under management. Share of surveyed investors expecting a debt ceiling resolution ahead of the X-date dropped from 80% in April to 71% in May.

A lot of speakers to track today. Cleveland Fed President Loretta Mester speaking at 8:15 am, Treasury Secretary Janet Yellen at 9 am. At 10 am the Fed’s Barr testifies before the House Financial Services Committee, and Barkin (Richmond Fed) goes on BTV at 10:30 am, John Williams, NY Fed speaks at 12:15 pm, Goolsbee (Chicago Fed) will be on BTV at 2:30 pm, Logan speaks at 3:15 pm and Bostic (Atl. Fed) and Goolsbee both speak at 7 pm.

At 9:15 am April industrial production and capacity utilization; production expected 0.0% increased 0.5%, manufacturing increased to +1.0% on forecasts of +0.1%. Factory use thought to be 79.8% increased 79.6% from 79.4% in March.

At 9:30 am the DJIA opened -125, NASDAQ -33, S&P -11. 10 year 3.55% +4 bp. FNMA 6.0 30 year coupon -12 bps and -6 bp from 9:30 am yesterday; the 5.5 coupon at 9:30 am -17 bp and -12 bp from 9:30 am yesterday.

At 10 am May NAHB housing market index was expected unchanged from April at 45, the index increased to 50. March business inventories expected 0.0% declined 0.1%.

Looking for a quiet day, the debt ceiling hangs over markets like a heavy fog. The 10 is at its highest level in a week, although the range is very narrow.

PRICES @ 10:00 AM

10 year note: 3.55% +5 bp

5 year note: 3.51% +4 bp

2 year note: 4.05% +5 bp

30 year bond: 3.90% +6 bp

Libor Rates: 1 month 5.108%; 3 month 5.330%; 6 month 5.383%; 1 year 5.303% (5/15/23)

30 year FNMA 6.0: @9:30 am 101.64 -12 bp (-6 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 100.36 -17 bp (-12 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.19 -17 bp (-11 bp from 9:30 am yesterday)

Dollar/Yuan: $6.9735 +$0.0209

Dollar/Yen: 136.22 +0.10 yen

Dollar/Euro: $1.0883 +$0.0007

Dollar Index: 102.40 -0.03

Gold: $2013.60 -$9.10

Bitcoin: 27,103 -251

Crude Oil: $71.65 +$0.54

DJIA: 33,183 -170

NASDAQ: 12,358 -7

S&P 500: 4128 -8

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.