CHM Blog

Prior to 8:30 am ET the 10 year note traded at 4.82% -2 bps.

At 8:30 am key inflation for Sept, the release of the PCE (personal consumption expenditures). Overall PCE month/month expected +0.3% increased 0.4%, year/year overall PCE thought to be +3.4%, reported at 3.4%. The core PCE month/month right on estimates +0.3%, year/year core +3.7% also as expected. Compared to August year/year core PCE declined from +3.9%, overall PCE year/year declined from 3.5%. Markets were expecting inflation to stabilize, the data suggests it has slowed a very little. The increase in month/month +0.4% against 0.3% forecasts not much of an issue as it was at the same level in August.

Also at 8:30 am, Sept personal income and spending; income expected +0.4% increased 0.3%. Personal spending thought to be +0.5% increased 0.7% and up from 0.4% in August. The increase in spending mirrors yesterday’s release of Q3 GDP that showed growth at 4.9% in the quarter after Q1 and Q2 growth increased about 0.2%.

Also this morning, a new study by the Associated Press and NORC Center for Public Affairs Research reported that more is being spent but less income coming in, the survey of 1,163 adults between October 5th and 9th. Two in three Americans say their household expenses are a lot higher than a year ago, but just one in four report rising income in the same time period. The poll found that eight in 10 of those who responded reported higher overall debt, with half reporting credit card debt, four in 10 saddled with car loans and one in four with healthcare related debt. Only 15% report a rise in household savings over the past 12 months, just 18% feel confident about their retirement savings, while three in 10 say they've delayed on a big purchase due to higher interest rates. And one in four report student debt, a bigger worry as a pause in those payments expired this month.

An increase in mid-east tensions over night, the US struck two Iran-linked facilities in Syria in response to attacks on American troops, after the Pentagon had announced the deployment of extra military personnel to the region.

At 9:30 am the DJIA opened -42, NASDAQ +116, S&P +16. The 10 year note at 9:30 am 4.85% +1 bp. FNMA 6.5 30 year coupon at 9:30 am -6 bps from yesterday’s close and +35 bps from 9:30 am yesterday.

At 10 am the final October U. of Michigan consumer sentiment index, expected unchanged from mid-month at 63.0, the index 63.8.

Over the last seven sessions the 10 year note has traded between 5.00% and 4.82%, in this volatile market that isn’t much difference between the high and low. Yesterday’s improvement driven by the ECB not increasing rates. The Fed is also expected to keep rates unchanged next week, and likely unchanged at the December meeting. The day-day swings in treasuries are extreme, yesterday the 10 declined 12 bps, Tuesday up 13 bps. From a technical perspective the 10 year note has not turned positive since the beginning of Sept and that didn’t last more than three days before near-term indicators reverse; what is occurring is rates increase to over sold levels (price) then rally back to neutral before starting another run higher.

PRICES @ 10:00 AM

10 year note: 4.86% +1 bp

5 year note: 4.79% -1 bp

2 year note: 5.04% -1 bp

30 year bond: 5.01% +2 bp

30 year FNMA 7.0 @9:30 101.04 +1 bp (+25 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 99.22 -6 bp (+35 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 97.09 -10 bp (+39 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 97.68 -7 bp (+34 bp from 9:30 am yesterday)

Dollar/Yuan: $7.3179 +$0.0021

Dollar/Yen: 149.66 -0.74 yen

Dollar/Euro: $1.0581 +$0.0016

Dollar Index: 106.35 -0.25

Gold: $1993.60 -$3.80

Bitcoin: 34,107 -102

Crude Oil: $83.71 +$0.50

DJIA: 32,718 -66

NASDAQ: 12,696 +100

S&P 500: 4140 +4

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.