CHM Blog

FOMC ends this afternoon and J. Powell will hold his post meeting press conference at 2:30 pm ET. No rate change is anticipated. This morning the 10 year note yield at 8 am down 2 bps from yesterday at 4.52%, MBS prices started the session +4 bps from yesterday. The Fed has cut rates three consecutive times since September, the last cut in December not only did not help rates, from then rates have increased.

As usual approaching a FOMC meeting opinions are circulating rapidly, although the belief the fed will not cut is 100% baked in all decisions. It is what Powell will say and what the Fed may do at its March meeting. Traders and investors are leaning into the bond market recently, looking for more cuts, the net long positions in treasuries now at the highest level since October 2010. Hedging for a possible March rate cut makes sense after December’s cooler-than-expected inflation print and Fed Governor Christopher Waller’s comment that easing by mid-year is possible. In the last two weeks the yield on the bellwether 10 year note has declined 28 bps, from 4.80% to 4.52% this morning.

This morning weekly MBA mortgage applications last week softened the composite down 0.2%, purchases -0.4% and re-finances -6.8%.

The US trade deficit in goods widened to a record $122.11B in December 2024, exceeding market expectations of $105.4B and up from a revised $103.5B in the previous month, according to an advance estimate. Imports surged 3.9% to $289.6B. Meanwhile, exports dropped 4.5% to $167.5B, driven by lower shipments of industrial supplies (-4.8%), capital goods (-2.6%), and consumer goods (-8.5%).

At 9:30 am the DJIA opened +5, NASDAQ -42, S&P -10. 10 year at 9:30 am 4.52% -2 bps. FNMA 6.0 30 year coupon at 9:30 am +3 bps from yesterday’s close and +17 bps from 9:30 am yesterday.

Look for quiet until 2/3:30 pm when the FOMC statement at 2 pm. Powell’s press conference at 2:30 pm to 3:30 pm.

There is another elephant that looms, on Friday the Fed’s key inflation report, December PCE; core PCE forecasts a month/month increase from 0.1% to 0.2%, year/year core unchanged at 2.8%, if inflation increases more than estimates rates will spike back to the recent highs.

PRICES @ 10:00 AM

10 year note: 4.52% -2 bp

5 year note: 4.32% -1 bp

2 year note: 4.20% -1 bp

30 year bond: 4.76% -3 bp

30 year FNMA 6.0: @9:30 am 100.77 +3 bp (+17 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.50 +1 bp (+11 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 100.87 +2 bp (+11 bp from 9:30 am yesterday)

Dollar/Yen: 155.34 -0.19 yen

Dollar/Euro: $1.0396 -$0.0035

Dollar Index: 108.20 +0.33

Gold: $2,775.80 +$8.30

Bitcoin: 102,118 +919

Crude Oil: $73.17 -$0.60

DJIA: 44,866 +16

NASDAQ: 19,634 -100

S&P 500: 6055 -13

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.