CHM Blog

This morning started generally unchanged with little direct news and continuing to digest last week’s rate declines. Over night the 10 declined to 4.58% -7 bps but didn’t last. The market found some resistance near the end of the Asian session, but eventually continued to fresh highs, though that rally was moderated over the past couple hours.

Minneapolis Fed’s Kashkari talking, doing what the Fed does, keep countering what markets expect as long the expectations stay within reason. On the end of rate cuts “We have to get inflation back down to 2% over a reasonable period of time,” Kashkari said “Ultimately, the economy will tell us how much is needed to get there. And I just don’t know.” He repeated comments made recently that it’s too soon to definitively make a call on whether or not more interest-rate increases are required. “I’m not seeing a lot of evidence that the economy is weakening.”

Austin Goolsbee, Chicago Fed; “The job market is getting into better balance. So far, the slowdown is what you would want, is what you would expect,” and the labor market is moving toward a sustainable growth rate. “At this time, for sure, we’ve got to get inflation down. That’s the number-one thing,”… “The priority should not be on GDP growth and job growth, it should be on inflation.”

Not an immediate market mover, but US Sept trade deficit at -$61.5B was fractionally larger than estimates and up 5% as imports increase, imports rose 2.7% to $322.7B The only data of interest is September consumer credit that will hit at 3 pm, the total expected is an increase of $10.0B, our focus is on revolving credit in the data, the use of credit cards as a clue about the consumer spending and borrowing.

At 9:30 am the DJIA opened -32, NASDAQ +46, S&P unchanged. 10 year at 9:30 am -5 bps to 4.60%. FNMA 6.5 30 year coupon at 9:30 am -8 bps and -16 bps from 9:30 am yesterday.

At 1 pm Treasury will auction $48B of 3 year notes.

Concerns about Treasury debt back in the news, US debt is accelerating at a rapid pace. Treasury saying the payments of the debt increased to over $1 trillion last month and doubled in the last 19 months. It is the equivalent to 15.9% of the total Federal budget.

PRICES @ 10:00 AM

10 year note: 4.61% -4 bp

5 year note: 4.58% unch

2 year note: 4.95% +2 bp

30 year bond: 4.76% -5 bp

30 year FNMA 7.0: @9:30 am 102.27 +17 bp (unch from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 100.59 -8 bp (-11 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 98.82 +8 bp (-12 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 99.37 +4 bp (-17 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2860 +$0.0166

Dollar/Yen: 150.60 +0.53 yen

Dollar/Euro: $1.0668 -$0.0052

Dollar Index: 105.77 +0.56

Gold: $1969.90 -$18.60

Bitcoin: 34,825 -206

Crude Oil: $78.64 -$2.17

DJIA: 34,101 +9

NASDAQ: 13,752 +53

S&P 500: 4366 unch

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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