CHM Blog

Early today prior to the 9:30 am ET open the stock indexes were trading slightly better, MBS prices down 6 bps, the 10 yr note 1.67% +3 bp. No driving news over the weekend.

Earnings reports this week; tech companies in the spot light. Facebook is scheduled to report third-quarter results after markets close today. Microsoft, Twitter and Alphabet, Google’s parent company, are scheduled for Tuesday. Apple and Amazon.com are expected to report later in the week. Strong earnings from banks, consumer companies and manufacturers have soothed investors’ concerns that higher inflation and labor shortages could erode profits. Prices are increasing quickly and spreading into more products. The rate markets on the way higher as inflation concerns are now universal compared to the inflation worries two months ago. A key question remaining is how global central banks will respond to rising prices.

From the wires: Treasury Secretary Janet Yellen expects price increases to remain high through the first half of 2022, but rejected criticism that the U.S. risks losing control of inflation. She also defended Federal Reserve Chair Jerome Powell’s record on regulating the financial system, telling CNN financial rules had “markedly strengthened” under his term. President Joe Biden and fellow Democrats are racing to reach agreement on a scaled-back version of his economic agenda. He met Sunday with Senate Majority Leader Chuck Schumer and West Virginia Democratic Senator Joe Manchin. Biden would like a spending bill completed before he leaves for climate summits in Europe later this week. “We will have something that will meet the president’s goals, I’m confident of that,” House Speaker Nancy Pelosi said Sunday on CNN’s State of the Union program. In the Senate Biden needs both Senator Manchin and Senator Kyrsten Sinema to get on board, otherwise any deal will be doomed in the Senate.

At 9:30 am the DJIA opened +62, NASDAQ +56, S&P +10. 10 yr at 9:30 am 1.65% +1 bp. FNMA 2.5 30 yr coupon at 9:30 am +3 bps frm Friday’s close and +11 bps frm 9:30 am Friday.

The next FOMC meeting is just around the corner; next week (11/3). The tapering of the $120B a month of Fed purchases will end. The Fed and other central banks continue to hold to their forecasts of inflation being temporary and blaming it all on supply chain problems. The plan as it stands now has broad consensus among officials on a plan to phase down their pandemic-era stimulus program by next June, reducing purchases by $15B each month. Meanwhile markets are less optimistic inflation will wind down any time soon. Fed officials, as inflation continues to increase, are not as cavalier as they were a month ago.

No economic data today; at 9 am the 10 at 1.67%, at 10 am 1.63%; MBS prices early this morning down 6 bps, at 10 am +8 bps. Not looking for any substantive improvement, still bearish; need a close below 1.60% and the 9 day RSI back below 50 (61 now). Bottom line; still a bearish trend for interest rates.

PRICES @ 10:00 AM ET

10 yr note: 1.63% -1 bp

5 yr note: 1.17% -3 bp

2 Yr note: 0.42% -4 bp

30 yr bond: 2.009% +2 bp

Libor Rates: 1 mo 0.087%; 3 mo 0.124%; 6 mo 0.172%; 1 yr 0.316% (10/22/21)

30 yr FNMA 3.0: @9:30 am 104.16 (+2 bp frm 9:30 am Friday)

30 yr FNMA 2.5: @9:30 am 102.22 (+11 bp frm 9:30 am Friday)

30 yr GNMA 2.5: @9:30 am 102.16 (+2 bp frm 9:30 am Friday)

Dollar/Yuan: $6.3877 +$0.0028

Dollar/Yen: 113.71 +0.21 yen

Dollar/Euro: $1.1611 -$0.0035

Dollar Index: 93.87 +0.23

Gold: $1807.50 +$11.10

Bitcoin: 63,191 +2,067

Crude Oil: $84.72 +$0.96

DJIA: 35,722 +46

NASDAQ: 15,136 +47

S&P 500: 4551 +6

Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 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.