CHM Blog

Rates retreated yesterday when Bill Ackman, Pershing Square hedge fund, announced he was closing is huge position selling treasuries (price) after the 10 year tested and failed at 5.0% three consecutive times. Ackman was very outspoken about selling treasuries, so his change of heart sent yields down across the curve, the 10 year note yield declined 8 bps, MBS prices ended the day 23 bps higher than the close on Friday.

This morning no follow-through from yesterday, at 8 am ET the 10 year note yield at 4.85% +1 bps and MBSs started the session -2 bps.

On the War; global leaders continue to press Israel to re-think its stated goal of attacking Hamas in Gaza. French Pres. Macron in Israel echoing what others have urged. Yesterday Hamas freed two more hostages, still keeping about 200 more. The Hamas plan; release a couple every few days to delay Israel’s plan. Macron said France would stand “shoulder to shoulder” with Israel but cautioned that its fight should stay focused.

On the House; eight Republicans running for Speaker, it started with two a couple of weeks ago with no success, then it was three with no success, now eight. The House expected to vote again today, likely more than one of two votes. Congress can’t authorize Biden’s proposed $100B aid package.

Bitcoin is gaining as another safe haven and there increased possibility that a bitcoin ETF will be approved. A bitcoin ETF would give investors a way to gain exposure to bitcoin’s price movements without owning the cryptocurrency directly. This morning another big increase.

At 9:30 am the DJIA opened +178 after declining 191 yesterday, NASDAQ opened +78, S&P opened +23. 10 year at 9:30 am 4.86% +1 bp. FNMA 6.5 30 coupon at 9:30 am -2 bps from yesterday’s close and +45 bps from 9:30 am yesterday.

At 9:45 am this morning, the only data today, October FLASH manufacturing and services. Manufacturing expected at 49.5 reported at 50, services index expected 49.4 reported at 50.9.

This afternoon at 1 pm Treasury will begin this week’s auctions with $51B of 2 year notes.

Although the bellwether 10 year note yield is fractionally higher this morning, it has held the 8 bp decline yesterday. Technically the 10 year note failed to crack 5.00%, tested three times. The drop yesterday has held so far today is momentarily encouraging but with the economic outlook still looking strong the Fed isn’t likely to back off its unrealistic target of 2.0% inflation rate. This Friday another inflation read, September PCE.

PRICES @ 10:00 AM

10 year note: 4.86% +1 bp

5 year note: 4.84% +3 bp

2 year note: 5.11% +5 bp

30 year bond: 5.00% unch

30 year FNMA 6.5: @9:30 am 99.11 -2 bp (+45 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 96.96 +1 bp (+65 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 97.55 +7 bp (+43 bp from 9:30 am yesterday)

Dollar/Yuan: $7.3099 -$0.0058

Dollar/Yen: 149.86 +0.15 yen

Dollar/Euro: $1.0613 -$0.0057

Dollar Index: 106.15 +0.62

Gold: $1975.00 -$12.80

Bitcoin: 34,405 +2831

Crude Oil: $84.86 -$0.63

DJIA: 33,191 +256

NASDAQ: 13,129 +111

S&P 500: 4247 +30

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.