CHM Blog

The debt ceiling still dominating markets. Yesterday House majority leader Kevin McCarthy said progress is being made then told his members they could go home for the holiday, in Washington no politician really cares, as much as they talk a good game, they will drag this down to the final hour next week. A deal will get done, but what will be in it? Fitch, one of the three credit rating firms, out yesterday putting US debt on negative credit watch, just as it did in 2011 when we went through the same ordeal. The agency said it expected a deal to pass but the time it has taken leads to concern that US debt isn’t what it used to be in terms of credit worthiness.

If there was any doubt the Fed will pause increasing rates on June 14th, that is out the window. The Fed will pause, the turmoil in financial markets should keep the Fed from doing anything else. Minutes from the May FOMC meeting released yesterday showed policymakers are still uncertain on how much more tightening may be needed to rein-in stubborn inflation. Two more Fed officials out this morning, Richmond’s Barkin and Boston’s Collins.

At 8:30 am ET weekly jobless claims, thought to be 248K reported 229K, the prior week revised to 225K from 242K. The 4 week average 231.75K from 244.25K. The Fed likes to see claims slow.

Also at 8:30 am, Q1 GDP, the second look, +1.3% from 1.1% on the advance release last month. The annual rate of personal consumption expenditures expected at 3.7% increased 3.8%, consumers continued to spend in Q1.

At 9:30 am the DJIA opened -98, NASDAQ +193 on earnings yesterday from NVidia a chip maker, S&P +25. 10 year after increasing overnight to 3.79% +4 bps at 3.75% unch. FNMA 6.0 30 year coupon -5 bps and -44 bps from 9:30 am yesterday. Late yesterday afternoon after 4 pm MBS prices dropped an additional 20 bps from 4 pm levels, down 44 bps on the day.

At 10 am April pending hone sales, expected +0.8% from -5.2% in March, sales as released were unchanged from March, year/year -20%.

At 1 pm Treasury will auction $35B of 7 year notes, the 2 and 5 year auctions were met with strong demand.

PRICES @ 10:00 AM

10 year note: 3.77% +2 bp

5 year note: 3.84% +10 bp

2 year note: 4.46% +8 bp

30 year bond: 3.99% unch

Libor Rates: 1 month 5.141%; 3 month 5.424%; 6 month 5.532%; 1 year 5.534% (5/24/23)

30 year FNMA 6.0: @9:30 am 100.66 -5 bp (-44 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.25 -8 bp (-45 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.20 -8 bp (-43 bp from 9:30 am yesterday)

Dollar/Yuan: $7.0776 +$0.0167

Dollar/Yen: 139.57 +0.09 yen

Dollar/Euro: $1.0719 -$0.0032

Dollar Index: 104.24 +0.35

Gold: $1947.20 -$17.40

Bitcoin: 26,301 -142

Crude Oil: $72.25 -$2.09

DJIA: 32,764 -36

NASDAQ: 12,647 +164

S&P 500: 4139 +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.

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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.