CHM Blog

Prior to 8:30 am ET data the 10 year traded up 2 bps from yesterday to 4.28%.

8:30 am Data: Weekly jobless claims expected at 219K reported at 218K an increase of 7K from the previous week. Continuing jobless benefits in the week ending November 18th rose by 86,000 to 1.927 million. That’s the highest level since November 2021.

The Fed’s favorite inflation data, PCE was in line with forecasts; month/month overall PCE +0.1% reported at 0.0%, year/year +3.0% better than 3.1% forecasts; the core PCE what Powell focuses on month/month +0.25 as expected, year/year at 3.5% also as forecast. October personal income thought to be +0.2% was right on, September revised from +0.3% to +0.4%. October personal spending also as expected +0.2% after increasing 0.7% in September.

That 8:30 am data was in line with estimates kind of an outlier, usually there is some differences between what is expected and reality. It is unusual to see forecasts meet reality. The initial reaction to the reports inched the 10 year note from 4.28% to 4.30%, MBS prices +3 bps from yesterday’s close. By 9:30 am the note traded 5 bps higher.

More positive inflation news coming from Europe this morning adding to the idea not only in the US but globally inflation is declining. The ECB reported November consumer prices at +2.4% down from 2.9% in October. The core inflation at 3.5%, declining for the fourth month in a row and leading to speculation the ECB will begin lowering rates by April. Bundesbank President Joachim Nagel saying it is premature to think about rate cuts. Inflation isn’t dead in Europe but like in the US it is slowing. Also, as in the US markets expect the full impact of tightening has yet to work through the economy.

November is ending on a very positive note; the decline in rates this month has been the strongest decline in rates going back to the 1980s when Paulk Volcker broke the inflation gains. Once the rally in rates began to have teeth it has been a race to climb aboard the train and yields have fallen, the 10 year note yield hit 5.0% in late October, since then the yield has fallen to 4.32%.

At 9:30 am the DJIA opened +187, NASDAQ +22, S&P +8. 10 year 4.32% +5 bps. FNMA 6.5 30 year coupon at 9:30 am -2 bps from yesterday’s close and -7 bps from 9:30 am yesterday.

At 9:45 am November Chicago purchasing managers index expected at 45.1 increased to 55.8, the first time in months the index is over 50 and implies expansion. A rather wide miss.

At 10 am October pending home sales were thought to have declined 2.2%, as reported down 1.5%; details this afternoon.

PRICES @ 10:00 AM

10 year note: 4.34% +8 bp

5 year note: 4.29% +5 bp

2 year note: 4.70% +3 bp

30 year bond: 4.50% +5 bp

30 year FNMA 7.0: @9:30 102.57 -4 bp (-10 bp from 9:30 yesterday)

30 year FNMA 6.5: @9:30 101.64 -2 bp (-6 bp from 9:30 yesterday)

30 year FNMA 6.0: @9:30 100.38 -13 bp (-10 bp from 9:30 yesterday)

30 year GNMA 6.0: @9:30 100.77 -7 bp (-9 bp from 9:30 yesterday)

Dollar/Yuan: $7.1289 -$0.0045

Dollar/Yen: 148.46 +1.23 yen

Dollar/Euro: $1.0897 -$0.0071

Dollar Index: 103.49 +0.72

Gold: $2053.50 -$13.60

Bitcoin: 37,363 -226

Crude Oil: $79.30 +$1.44

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.