September 14th, 2021 10:15 AM by Richard Sardella MLO.100007700/NMLS 233568
Not much movement again early this morning. August CPI at 8:30 am ET generally about what had been expected, inflation at the consumer level slightly less than in July. CPI expected +0.4%, as reported +0.3%; July CPI +0.5%; yr./yr. expected and reported at 5.3%, July yr./yr. +5.4%. Ex food and energy +0.1% on expectations of +0.3%, yr./yr. expected 4.2%, as reported +4.0%; July yr./yr. +4.3%.
The headlines better than what was thought but not enough to initially move interest rates much; at 9 am the 10 yr. note traded at 1.33% unchanged from yesterday after increasing to 1.35% just before the 8:30 am release of CPI. It was the smallest advance in seven months, according to Labor Department data. The question now is, has inflation run its upward course and the Fed has continued to think it would. Declines in the prices of used cars, airfares and auto insurance led the way lower. While price spikes associated with the economy’s reopening are beginning to abate, tenuous supply chains could linger well into 2022 and keep inflation elevated. The Federal Reserve Bank of New York released a survey yesterday showed that consumers expect inflation at 4% over the next three years, the highest in data back to mid-2013. The CPI report also showed the hot housing market is starting to filter through to rent prices, which rose by the most since March 2020. At the end of the day, although inflation held well in August, the transitory Fed view is still in play. The FOMC meeting is next week.
Earlier this morning the National Federation of Independent Businesses (NFIB) released its August small business optimism index, expected at 99.0 from 99.7 in July, the index increased to 100.1.
At 9:30 am the DJIA opened +96, NASDAQ +55, S&P +15. 10 yr. at 9:30 am 1.32% -1 bp. FNMA 2.0 30 yr. coupon +11 bps from yesterday and unch from 9:30 am yesterday; the 2.5 coupon at 9:30 am +8 bps from yesterday and +11 bp from 9:30 am yesterday.
That’s it for today’s data.
The Congress continues to work on the $3.5 trillion spending bill; for all of the optimism from the far left the bill is facing a lot of tough negotiations with moderate Democrats questioning what their constituents will tolerate. No Republican will vote for the bill when it does come up for a vote. Many centrist Democrats would like to see the sweeping budget package paid for with government savings and new tax revenues from closing what they see as tax loopholes exploited by businesses, instead of new debt. But those sources of revenue can be deeply controversial, particularly changes proposed by Mr. Biden to how capital-gains are taxed.
MBS prices have been volatile so far while the 10 yr. note remained generally unchanged until 10 am not just this morning but for the past five sessions. Stocks started better at 9:30 am but 30 minutes later began the decline; increasing numbers of stock analysts are talking the potential for a 10% correction from the recent highs. When stocks rolled over the 10 yr. yield caught a nice bid; after sitting unchanged this morning the 10 yr. at 10 am dropped to 1.29% -4 bps and MBS prices improved from 9:30 am.
PRICES @ 10:00 AM ET
10 yr. note: 1.29% -4 bp
5 yr. note: 0.77% -4 bp
2 Yr. note: 0.21% -1 bp
30 yr. bond: 1.87% -4 bp
Libor Rates: 1 mo. 0.083%; 3 mo. 0.116%; 6 mo. 0.148%; 1 yr. 0.223% (9/13/21)
30 yr. FNMA 2.0: @9:30 am 101.33 +11 bp (unch from 9:30 am yesterday)
30 yr. FNMA 2.5: @9:30 am 103.86 +8 bp (-10 bp from 9:30 am yesterday)
30 yr. GNMA 2.5: @9:30 am 103.39 +11 bp (+12 bp from 9:30 am yesterday)
Dollar/Yuan: $6.4398 -$0.0121
Dollar/Yen: 109.84 -0.16 yen
Dollar/Euro: $1.1826 +$0.0015
Dollar Index: 92.47 -0.20
Gold: $1793.60 -$0.80
Bitcoin: 46,533 +1,809
Crude Oil: $70.93 +$0.48
DJIA: 34,769 -100
NASDAQ: 15,097 -8
S&P 500: 4460 -9
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.