CHM Blog

More buying in treasuries this morning pushing the 10 yr to 3.76% +4 bps at 8 am ET, MBS prices opened down 22 bps frm yesterday. No deal on the debt ceiling yesterday as Biden and McCarthy continue to meet, McCarthy saying he and the Pres will meet everyday to get a deal done, the two agreed that a “default is off the table.” The haven trades into treasuries are getting long in the tooth, a deal will get done as there isn’t any real alternative, US will not default on its debt.

Yesterday the National Association for Business Economics (NABE) released a survey that doesn’t look promising on inflation. 45 economists in the survey said inflation in 2023 would stay at 4.2%, an increase frm 3.9% in their Feb survey. The survey suggests there will be no rate cuts this year frm the Fed as has been thought recently. Powell will pause at next week’s meeting; the survey suggests two more rate increases may be needed this year. The economists though did increase their projections for the economy, a small 1.2% growth, but better than 0.8% in the February survey.

The stock market continues to defy the bearish forecasts. So far this year the equity markets have chalked up $3 trillion in investments. The bank problems, the debt ceiling, propelling investors to move on worries that if not investing now, it may become too late later. Meanwhile recession continues to get a lot of believers for slowing economic outlooks later this year. A lot of the positive idea is coming frm the consumer and services sector remaining strong. The consumer is being squeezed and not many are paying much attention. The mi-month U. of Michigan consumer sentiment data released recently showed a huge decline in what consumers expect. Slowly, the forecasts for inflation are being increased and belief inflation won’t get to 2.0% as the fed and other central banks are targeting.

At 9:30 am the DJIA opened -160, NASDAQ -48, S&P -18. 10 yr 3.74% +2 bp (3.76% earlier this morning). FNMA 6.0 30 yr coupon at 9:30 am -3 bps and -9 bps frm 9:30 am yesterday; the 5.5 coupon -11 bps and -19 bps frm 9:30 am yesterday.

At 9:45 am the FLASH PMI indexes; manufacturing expected at 50.0, services at 52.6; as reported manufacturing dropped to 48.5 and services increased to 55.1.

At 10 am April new home sales were thought to be at 670K frm 683K, as released sales at 683K, March revised to 656K. sales +4.1% frm march’s revision.

At 1 pm Treasury will auction $42B of 2 yr notes, the highest rate across the yield curve (4.38%). May Richmond Fed manufacturing index expected at -8, dropped to -15 frm -10 in April.

Technically the 10 yr note has become too pricy, over the last seven trading days the note has gone from 3.40% to 3.74% this morning. All short-term measurements are in overbought conditions, some back-filling is likely but may take a debt deal to push yields back somewhat.

PRICES @ 10:00 AM

10 yr note: 3.74% +2 bp

5 yr note: 3.80% +3 bp

2 Yr note: 4.39% +5 bp

30 yr bond: 3.99% +2 bp

Libor Rates: 1 mo 5.127%; 3 mo 5.375%; 6 mo 5.455%; 1 yr 5.431% (5/22/23)

30 yr FNMA 6.0: @9:30 am 101.08 -3 bp (-9 bp frm 9:30 am yesterday) @10 am -14 bp on the day

30 yr FNMA 5.5: @9:30 am 99.73 -11 bp (-19 bp frm 9:30 am yesterday) @10 am -27 bp on the day

30 yr GNMA 5.5: @9:30 am 99.75 -8 bp (-12 bp frm 9:30 am yesterday) @10 am -23 bp on the day

Dollar/Yuan: $7.0527 +$0.0169

Dollar/Yen: 138.62 +0.03 yen

Dollar/Euro: $1.0776 -$0.0037

Dollar Index: 103.51 +0.31

Gold: $1972.00 -$5.20

Bitcoin: 27,204 +309

Crude Oil: $72.74 +$0.69

DJIA: 33,246 -41

NASDAQ: 12,694 -26

S&P 500: 4182 -11

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.