CHM Blog

This morning the 10 year note began US trading at 4.69% down 10 bps from Friday’s close, the low overnight 4.62%. Will the Fed move rates higher before year end? That question bounces around pending whatever Fed officials have to say, some officials see another increase, others think no more increases. Fed Vice Chair Philip Jefferson yesterday told a conference that he would “remain cognizant of the tightening in financial conditions through higher bond yields” in assessing “the future path of policy,” echoing similar comments from other policymakers in recent days. Also, yesterday Dallas Fed President Logan indicated that if risk premiums in the bond market are on the rise, that “could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening.” Last week San Francisco Fed President Mary Daly, remarked “if financial conditions, which have tightened considerably in the past 90 days, remain tight, the need for us to take further action is diminished.”

Inflation measurements have declined recently, tomorrow Sept PPI data expected to decline somewhat from August.

The only data today, the Sept NFIB small business optimism index, not news that grabs much interest, the index expected at 91.2 reported 90.8 and down from 91.3.

At 9:30 am the DJIA opened +61 after increasing 197 yesterday, NASDAQ opened +12, yesterday +53, S&P +6 from +27 yesterday. The 10 year note 4.69 -10 bps from Friday. FNMA 6.0 30 year coupon at 9:30 am +48 bps from Friday and +75 bp from 9:30 am Friday.

At 1 pm Treasury will auction 3 year notes.

It is a flight to safety today, investors buying 10 year notes with the mid-east looking very worrisome. How Israel handles it, whether Hezbollah opens another front in northern Israel. Fed officials leaning toward no rate increases this year, not a complete belief as there are Fed officials still sending up warning flares.

PRICES @ 10:00 AM

10 year note: 4.69% -11 bp

5 year note: 4.63% -13 bp

2 year note: 4.98% -10 bp

30 year bond: 4.86% -10 bp

30 year FNMA 6.5: @9:30 am 99.95 +36 bp)

30 year FNMA 6.0: @9:30 am 98.17 +48 bp) (+75 bp from 9:30 am Friday)

30 year GNMA 5.5: @9:30 am 96.64 -12 bp)

Dollar/Yuan: $7.2979 +$0.0060

Dollar/Yen: 148.94 +0.44 yen

Dollar/Euro: $1.0595 +$0.0027

Dollar Index: 105.99 -0.10

Gold: $1869.00 +$4.70

Bitcoin: 27,384 -190

Crude Oil: $85.95 -$0.43

DJIA: 33,680 +75

NASDAQ: 13,550 +66

S&P 500: 4352 +16

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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