CHM Blog

Markets were rocked yesterday on the stronger April ISM manufacturing index. The 10 ran back to its key resistance at 3.60% +17 bps, the 2 year note +13 bps. MBS prices down 35 bps at 4 pm ET ending the day -25 bps as day traders covered their positions in the final hour. The ISM manufacturing index, the weakest sector in the economy increased in all areas from March renewing concerns that the Fed may have more tightening to do that was widely expected until 10 am when the report hit.

At 9 am the 10 year at 3.55% -4 bps, MBS prices unchanged. The FOMC meeting begins today, nothing to be concerned about today until tomorrow afternoon at 2 pm. At 10 am this morning there is another key release, March JOLTS job openings.

The Reserve Bank of Australia unexpectedly raised its cash rate by 25 bps to 3.85% indicating that additional tightening may be required.

Core CPI in the Eurozone was softer than thought; the core rose 5.6% from a year ago in April — down from March’s record 5.7% advance and in line with the median estimates of economists. The headline inflation rate, meanwhile, ticked up to 7% — a touch more than the 6.9% analysts anticipated. The ECB will meet on Thursday.

The US debt ceiling is rapidly approaching, Treasury Secretary Yellen said in a letter to Congress that the Treasury Department could exhaust its extraordinary measures by June 1 if there is no deal to extend or suspend the debt ceiling.

At 9:30 am the DJIA opened -77, NASDAQ -21, S&P -11. 10 year 3.55% -2 bps. FNMA 5.5 30 year coupon at 9:30 am -9 bps and -30 bp from 9:30 am yesterday; FNMA 6.0 coupon -5 bps and -27 bp from 9:30 am yesterday.

At 10 am March JOLTS job openings, a report that historically didn’t garner much interest, now with Powell talking about the number of job openings (relative to available workers), this measure has become a market mover. Job openings declined in Feb more than thought, the reaction sent rates higher. As released, JOLTS, expected at 9.70 mil from 9.33 mil, 9.590 mil and Beb revised from 9.93 mil to 9.974 mil.

March factory orders expected +1.3% from -0.7% in Feb; orders increased 0.9%, Feb orders revised to -1.1%.

Nothing else now until tomorrow afternoon when FOMC and Powell take the stage. The reaction to JOLTS dropped the 10 year note from 3.55% at 9:30 am to 3.48% -9 bps on the day. The stock indexes under pressure in early going adding a little support to the 10 year note. Once again yesterday 3.60% held against strong selling. Technically, the 10 at its 20-day and 40-day averages, not significant with FOMC tomorrow. The improvement this morning after JOLTS reported at 10 am.

PRICES @ 10:00 AM

10 year note: 3.48% -9 bp

5 year note: 3.53% -12 bp

2 year note: 4.06% -9 bp

30 year bond: 3.73% -8 bp

Libor Rates: 1 month 5.062%; 3 month 5.302%; 6 month 5.407%; 1 year 5.366% (5/1/23)

30 year FNMA 6.0: @9:30 am 101.56 -5 bp (-27 bp from 9:30 am yesterday)

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

30 year GNMA 5.5: @9:30 am 100.25 -11 bp (-17 bp from 9:30 am yesterday)

Dollar/Yuan: $6.9121 unch

Dollar/Yen: 137.36 -0.12 yen

Dollar/Euro: $1.00958 -$0.0017

Dollar Index: 102.31 +0.16

Gold: $1995.60 +$3.40

Bitcoin: 28,002 +297

Crude Oil: $73.81 -$1.80

DJIA: 33,760 -292

NASDAQ: 12,122 -99

S&P 500: 4129 -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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