CHM Blog

Continued selling to begin the week; the 10 at 8:30 am ET 1.51% +5 bps, MBS prices -25 bps from Friday. Stock indexes at 8:30 am under pressure, the NASDAQ -145.

At 8:30 am August durable goods orders were stronger than thought; +1.8% expected 0.7%, ex transportation though weaker at +0.4% expected, +0.2%. Core capital goods expected +0.2% increased 0.5%. The increase is primarily due to increasing aircraft orders.

This week Democrats will try to pass the $3.5 trillion social spending bill. House Speaker Nancy Pelosi put the infrastructure bill on the schedule for Monday under pressure from moderates eager to get the bipartisan bill, which has already passed the Senate, enacted. But progressives -- whose votes are likely vital -- are insisting on progress first on the bigger social-spending bill. “We’re going to pass the bill this week,” Pelosi said of the public works legislation on ABC’s “This Week” program yesterday. “I’m never bringing a bill to the floor that doesn’t have the votes.” The Senate passed the $1 trillion infrastructure bill weeks ago, it has support but progressives in the House won’t allow a vote unless the $3.5 trillion social spending and tax increase bill is wrapped together, (the amount is actually $5.5 trillion). Pelosi said that it “seems self-evident” that the bigger measure will be less than the $3.5 trillion allowed in the budget resolution that Democrats are working with, because of objections from moderates in the House and Senate.

On Friday at 12:01 am the government fiscal year ends and a government shutdown looms although Janet Yellen has said Treasury could make it to mid-month by delaying a number of payments yet still will be able to pay its debts that come do. Will politicians allow the Treasury to default on our debt? It will get a lot of ink this week but at the end of the day the debt ceiling will be increased. We went through this back in 2013 and historically it comes up very couple of years, back then the S&P rating agency got fed up and lowered the US global debt rating.

The supply chain remains broken and isn’t likely to get fixed for months. The Wall Street this morning reporting that the ports in the US are nowhere near keeping up with ships coming into the US, cargo ships at the two key ports in California are backed up as long as six weeks; exporters to the US are working 24/7 but in the US only working two shifts a day. Big box retailers sweating whether they will get the supplies needed for Christmas holidays, consumers sensing the potential already emptying shelves doing holiday buying now. Here comes the toilet paper and paper towel shortage, Costco now limiting the number of rolls that can be bought. The inflation outlook finally over shadowed the Feds definition of “transitory”.

The 10 yr. note rate 17 bps higher than last Wednesday; mortgage rates up 15 to 20 bps. Early this morning the 10 yr. at 8:30 am 1.51% +6 bps, MBS trading began down 31 bps.

At 9:30 am the DJIA opened +55, NASDAQ -87, S&P -8. 10 yr. note 1.49% +3 bp. FNMA 2.0 30 yr. coupon at 9:30 -20 bps from Friday and -2 bps from 9:30 am Friday; the 2.5 coupon at 9:30 am -19 bps and +6 bp from 9:30 am Friday. Recall Friday MBS prices did increase from 9:30 am.

At 11:30 am $60B 2 yr. note auction.

At 1 pm $61B 5 yr. note auction.

Our technical target remains at 1.55%, after the 10 broke 1.44% it set the run to 1.55%; always a caveat though, currently the 10 yr. note 9 day relative strength index is very oversold, the potential of some consolidation is high; that said, the idea that had persisted that inflation would be ‘transitory’ has been jettisoned by markets and even the Fed has had to acquiesce.

PRICES @ 10 AM ET

10 yr. note: 1.49% +3 bp

5 yr. note: 0.97% +2 bp

2 Yr. note: 0.28% unch

30 yr. bond: 2.00% +1 bp

Libor Rates: 1 mo. 0.085%; 3 mo. 0.132%; 6 mo. 0.155%; 1 yr. 0.223% (9/24/21)

30 yr. FNMA 2.0: @9:30 am 100.23 -20 bp (-2 bp from 9:30 am Friday)

30 yr. FNMA 2.5: @9:30 am 103.06 -19 bp (+6 bp from 9:30 am Friday)

30 yr. GNMA 2.5: @9:30 am 102.78 -8 bp (+3 bp from 9:30 am Friday)

Dollar/Yuan: $6.4600 -$0.0067

Dollar/Yen: 110.88 +0.14 yen

Dollar/Euro: $1.1697 -$0.0024

Dollar Index: 93.42 +0.10

Gold: $1753.20 +$1.50

Bitcoin: 43,508 -100

Crude Oil: $75.60 +$1.60

DJIA: 35,033 +236

NASDAQ: 14,906 -142

S&P 500: 4445 -10

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.

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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.