CHM Blog

At 8:30 am August wholesale prices expected to be lower than in July but were even lower than forecasts. Producer prices unexpectedly fell 0.1% month/month in August, following a downwardly revised 0.7% rise in July and well below forecasts of a 0.3% increase. It is the first decline in producer prices in four months, with cost for services falling 0.2%, the largest drop since April, mainly due to a 3.9% decline in margins for machinery and vehicle wholesaling. Core producer prices, which exclude food and energy, fell by 0.1% from the previous month, contrasting with expectations of a 0.3% increase following the downwardly revised 0.7% increase in the prior month. It was only the third drop in core producer prices since the pandemic in the second quarter of 2020, Initial reactions were rather muted, the 10 year dipped 2 bps, MBS prices generally unchanged from yesterday; at the short end, the 2 year note rate declined 4 bps.

A positive outlook for inflation, but its tomorrow’s consumer prices that is the real key. Estimates are not as encouraging as PPI. Month/month overall CPI expected +0.3% from +0.2%, year/year +2.9% from +2.7%; core CPI ex food and energy month/month +0.3% unchanged from July, year/year at 3.1% also unchanged from July. Current market outlook after August employment data and huge downward revisions from BLS for job growth are 50 bp cut in rates from the Fed, possibly at the next FOMC meeting on the 17th, or 25 at the September meeting and 25 at the FOMC meeting in October.

Last week mortgage applications increased. Mortgage applications rose by 9.2% from the previous week in the period ending September 5th according to data from the Mortgage Bankers Association. Applications for a loan to refinance a current mortgage surged by 12.2% from the previous week to their highest level in one year. In turn, applications for a mortgage to purchase a new home rose by 6.6%.

At 1 pm Treasury will auction $39B of 10 year notes; yesterday’s 3 year auction met with strong bidding and demand.

PRICES @ 10:00 AM

10 year note: 4.07% -2 bp

5 year note: 3.59% -4 bp

2 year note: 3.53% -4 bp

30 year bond: 4.72% -2 bp

30 year FNMA 5.5: @9:30 am 101.17 +10 bp (-5 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 102.41 +3 bp (-6 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 101.10 +4 bp (-2 bp from 9:30 am yesterday)

Dollar/Yen: 147.30 -0.10 yen

Dollar/Euro: $1.1724 +$0.0013

Dollar Index: 97.65 -0.14

Gold: $3,691.80 +$9.60

Bitcoin: 114,006 +2369

Crude Oil: $63.15 +$0.51

DJIA: 45,608 -103

NASDAQ: 21,953 +74

S&P 500: 6546 +33

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.