CHM Blog

It’s the FOMC meeting today, how will Powell and the Fed frame it? The overwhelming consensus is a 25 bp cut in the key rate. A couple of weeks ago markets were confident of another cut in rates at the January meeting but they are much less confident now. Besides Powell and the FOMC policy statement, this afternoon we will get the Fed’s projections for inflation and employment.

Powell has been less concerned about inflation and more concerned about the employment sector declining, yesterday the October JOLTS job openings expected to decline to 7.200 mil from 7.658 mil in September increased to 7.670 mil, and job quits also were lower than expected. Meanwhile weekly jobless claims while not declining are not increasing over the last couple of months.

This morning MBA reported last week’s mortgage applications, the composite index increased to 4.8% from -1,4% in the prior week, purchase applications were down 2.4% after increasing 2.5% the week before. What was surprising was that re-finance applications last week were up 14.3% from the prior week that were down 4.4%, refis 88% higher than the same week last year. The refinance share of total mortgage activity rose to 58.2% from 53.0% the previous week.

Q3 employment costs were a little less than forecasts, expected at +0.9% reported at 0.8%, year/year ECI +3.5% against estimates of +3.7%. Wages and salaries increased 0.8%, down from a 1% rise in Q1, while benefit costs increased 0.8%, up from 0.7% previously. Compensation costs for private industry workers rose by 0.8% (versus 1%), and those for state and local government workers advanced by 0.8% (versus 0.8%). Year-on-year, employment costs rose by 3.5%, after a 3.6% advance in Q2. Wages not contributing to increasing inflation.

At 9:30 am the DJIA opened -15, NASDAQ -59, S&P -6. 10 year note at 9:30 am 4.19% unchanged from yesterday. FNMA 5.5 30 year coupon at 9:30 am -3 bps from yesterday’s close and -15 bps from 9:30 am yesterday.

Along with the Fed this afternoon Treasury is expected to release the November budget balance, the estimates are -$212.7B down from -$284.35B in October.

PRICES @ 10:00 AM

10 year note: 4.18% -1 bp

5 year note: 3.78% -2 bp

2 year note: 3.60% -2 bp

30 year bond: 4.79% -2 bp

30 year FNMA 5.5: @9:30 am 100.80 -3 bp (-15 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 102.25 unch (-12 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.60 -8 bp (-9 bp from 9:30 am yesterday)

Dollar/Yen: 156.56 -0.34 yen

Dollar/Euro: $1.1641 +$0.0015

Dollar Index: 99.12 -0.10

Gold: $4,222.00 -$14.20

Bitcoin: 91,923 -1183

Crude Oil: $57.88 -0.37

DJIA: 47,676 +102

NASDAQ: 23,528 -49

S&P 500: 6843 +3

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.