September 12th, 2022 9:10 AM by Richard Sardella MLO.100007700/NMLS 233568
Both inflation expectations are lower than in July, raising the question, will the Fed increase the FF rate next week by 75 bps or bend against all Fed recent comments and cave to 50 bps? Jerome Powell has been overly strong in his remarks about driving inflation back, it is still there even if the estimates are lower as expected. He isn’t alone most recent comments from other Fed officials have tilted to a 75 bp increase and markets have already discounted it in present interest rate levels. Last week ECB increased its base rate by 75 bps, ECB prior to that had been slow in increasing rates in the face of the economic slide in Europe and now facing even more economic decline as cold weather approaches and Russia shutting down the natural gas pipeline.
At 9:30 am ET the DJIA opened +128, NASDAQ +70, S&P +25. 10 yr. at 9:30 am 3.29% -3 bps. FNMA 5.0 30 yr. coupon +13 bps from Friday’s close and +8 bps from 9:30 am Friday.
For two months the US dollar has been on a rampage moving higher almost daily. Last week the dollar showed signs of cooling, this morning the dollar index is lower; one reason is that the ECB made a strong move last week increasing its base rate by 75 bps. The euro surged the most in six months against the dollar as European Central Bank policy makers underlined the need for further interest-rate hikes and as an anticipated slowdown in US inflation cooled the rampant demand for greenbacks. The dollar is the weakest this morning in the last three weeks and back above parity with the euro. With Russia slowing and even stopping the flow of gas worries of a serious recession looms over Europe. Is this a sea change for the dollar, we doubt it, maybe more technical than fundamental. The breakthrough by Ukraine’s forces in the war against Russia has also helped buoy sentiment on the currency.
Two treasury auctions coming; at 11:30 am 41B of 3s and at 1 pm $32B of 10s (9 yrs. 11 months)
PRICES @ 10:00 AM
10 yr note: 3.28% -4 bp
5 yr note: 3.39% -5 bp
2 Yr note: 3 .53% -4 bp
30 yr bond: 3.46% +1 bp
Libor Rates: 1 mo 2.773%; 3 mo 3.245%; 6 mo 3.811%; 1 yr 4.189% (9/9/22)
30 yr FNMA 5.0: 100.78 +13 bp (+8 bp from 9:30 am Friday)
30 yr FNMA 4.5: 99.11 +20 bp (+5 bp from 9:30 am Friday)
30 yr GNMA 4.5: 99.70 -3 bp (unch from 9:30 am Friday)
Dollar/Yuan: $6.9265 UNCH
Dollar/Yen: 142.69 +0.11 yen
Dollar/Euro: $1.0116 +$0.0070
Dollar Index: 108.34 -0.66
Gold: $1737.40 +$8.80
Bitcoin: 22,395 +751
Crude Oil: $88.00 +$1.21
DJIA: 32,426 +275
NASDAQ: 12,253 +141
S&P 500: 4111 +44
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.