October 20th, 2022 9:33 AM by Richard Sardella MLO.100007700/NMLS 233568
Over night the 10 yr. climbed to 4.18% from 4.13 yesterday, but by 8:30 am ET back to 4.14% where it settled yesterday. The 10 broke into a new high yesterday taking out our support at 4.03%. MBS prices yesterday lagged the climb of the 10 until the last hour (4 pm-5 pm) when selling pushed prices down 69 bps from -62 at 4 pm. In pre-open trading in futures markets stock indexes were relatively quiet.
Weekly jobless claims at 8:30 am, expected +235K were 214K -12K from the prior week.
October Philly Fed manufacturing index was thought to be -5.0, as reported -8.7.
UK prime minister Liz Truss resigned this morning after the financial turmoil over the last three weeks.
More comments from St. Louis Fed James Bullard. He expects the central bank to end its "front-loading” of aggressive interest-rate hikes by early next year and shift to keeping policy sufficiently restrictive with small adjustments as inflation cools. “You do have to think about what the reasonable level is,” said Bullard, who has become Wall Street’s gauge for any Fed policy pivots. Such an approach would resonate with DoubleLine Capital Chief Investment Officer Jeffrey Gundlach’s view that Treasury yields may hit a peak between now and the end of the year. More Fed officials through the day today, Patrick Harker and Michelle Bowman among those making remarks. Beginning next week the Fed will go on its self-imposed lock down, no Fed officials will speak until after the FOMC meeting on Nov 2nd.
Following comments today from James Bullard, it is very likely at the FOMC meeting in two weeks the policy statement will be less aggressive. There is increasing momentum in the thought that the Fed after the Dec meeting will signal a slowdown in rate increases. The problem though is that if the Fed continues to drive for 2.0% inflation, the Fed can’t stop. The Fed, and other central banks must come to the understanding inflation won’t easily decline to meet that target. The Fed must face the reality it needs to change the inflation target from 2.0% to something around 4.00%. The central banks in the world are confused, missing inflation, trying to keep economies from diving deeper into inflation. In Europe inflation in places running at 10.0%. Taking the poison pill to break it when increasingly world consumers are now resigned to inflation won’t accomplish the intended result.
At 9:30 am the DJIA opened +69, NASDAQ -17, S&P -5. 10 yr. at 9:30 am 4.17% +3 bps. FNMA 5.5 30 yr. coupon at 9:30 am -11 bps from yesterday’s close and -34 bps from 9:30 am yesterday.
At 10 am Sept existing home sales were expected at 4.695 mil from 4.800 mil, sales at 4.71 mil -1.5%, yr./yr. -23.8%, median sales price $384,800 +8.4% yr./yr.
Also, at 10 am Sept leading economic indicators, were expected at -0.3%, the same decline in August; as reported -0.4%.
PRICES @ 10:00 AM
10 yr note: 4.17% +3 bp
5 yr note: 4.38% +2 bp
2 Yr note: 4.58% +3 bp
30 yr bond: 4.18% +5 bp
Libor Rates: 1 mo 3.501%; 3 mo 4.278%; 6 mo 4.737%; 1 yr 5.339% (10/19/22)
30 yr FNMA 6.0: 99.83 -8 bp (-34 bps from 9:30 am yesterday)
30 yr FNMA 5.5: 97.91 -11 bp (-34 bp from 9:30 am yesterday)
30 yr GNMA 5.5: 98.30 -11 bp (-31 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2283 -$0.0005
Dollar/Yen: 149.88 -0.02 yen
Dollar/Euro: $0.9788 +$0.0013
Dollar Index: 112.72 -0.27
Gold: $1636.20 +$2.00
Bitcoin: 19,201 +4
Crude Oil: $87.17 +$1.62
DJIA: 30,574 +150
NASDAQ: 10,730 +49
S&P 500: 3705 +10
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.