CHM Blog

Bond markets remain in very tight ranges with the shut down not hurting or helping, the 10 year note since September 19th has been locked between 4.08% and 4.20%, early this morning at 4.10%.

Once again today, there aren't any economic releases, although MBA did report last week’s mortgage applications. Applications declined 4.7% in the week ending October 3rd, extending the 12.7% drop recorded in the previous period. Refi’s fell by 8%, while applications for home purchases eased by 1%. More buyers are turning to adjustable-rate mortgages (ARMs). These accounted for 9.5% of total applications last week, up from 8.4% a week earlier.

There is no news on the government shut down.

Yesterday August consumer credit was reported. The use of credit cards (revolving credit) fell in August for the third time this year. The decline was offset by a small rise in nonrevolving credit such as car loans and student loans. Overall consumer credit outstanding in August was basically flat, forecasts were for an increase of $13.5B. The job market slowing, inflation still high at 3.1%, the Fed facing a rate cut that will be a change in the Fed’s approach to how it handles short term rates.

At 9:30 am the DJIA opened +121, NASDAQ +64, S&P +13. 10 year note 4.11% -2 bps. FNMA 5.5 30 year coupon at 9:30 am +5 bps from yesterday’s close and +8 bps from 9:30 am yesterday.

At 1 pm Treasury is set to auction $39B of 10 year notes, yesterday’s 3 year auction was met with strong demand. The 10 a different animal, demand will be closely watched.

At 2 pm the minutes from the September FOMC meeting will be released, in a sense its old news with the government closure but the minutes does get attention.

MBS prices have been inching higher the past day or two, but there won't be much directional movement until the government is back to normal. Tomorrow Jerome Powell is scheduled to talk briefly providing opening remarks at the Community Bank Conference, Washington, according to the Fed calendar it will be a pre-recorded speech.

PRICES @ 10:00 AM

10 year note: 4.12% -1 bp

5 year note: 3.71% unch

2 Year note: 3.58% unch

30 year bond: 4.72% -1 bp

30 year FNMA 5.5: @9:30 am 100.99 +5 bp (+8 bps from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 102.20 unch (+5 bps from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.78 +2 bp (+3 bps from 9:30 am yesterday)

Dollar/Yen: 152.59 +0.69 yen

Dollar/Euro: $1.1631 -$0.0028

Dollar Index: 98/74 +0.17

Gold: $4,051.00 +$46.10

Bitcoin: 122,237 +574

Crude Oil: $62.36 +$0.64

DJIA: 46,595 -7

NASDAQ: 22,927 +139

S&P 500: 6737 +22

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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