CHM Blog

Employment still increasing, while the unemployment rate also increased in May. Non-farm jobs expected 190K increased 339K and April jobs originally reported at 253K revised to 294K. Private jobs thought to be at 165K increased 283K and April revised from 230K to 253K. Average hourly earnings month/month +0.3% as expected but year/year expectations +4.4% declined to +4.3%. Labor participation rate at 62.6% as expected. The stock indexes improved while interest rates increased; the initial reaction on the 10 year note +5 bps from yesterday to 3.65%, MBS prices -34 bps.

The Fed has been signaling a pause at the June FOMC meeting, yesterday Philadelphia Fed’s Harker echoed his view that a pause is likely, one of five Fed officials this week that tilted toward a pause. “I think we should pause, because pause says we’re going to hold for a while — and we might,” he said. “We should at least skip this meeting in terms of an increase. The very strong job gains this morning is anathema for the Fed, job gains is one area the Fed wants to see slowing, given the last two months of stronger than expectations will have some head scratching. Countering stronger jobs, the decline in earnings, April month/month earnings +0.4% now +0.3%. We expect the Fed will pause rate increases at the coming FOMC meeting. The decline in annual wage gains tied with Wednesday’s April JOLTS job openings that showed more openings than forecasts lessen the immediate reaction that the Fed will be overly concerned about the strong jobs. What we can expect from the FOMC policy statement and Powell’s press conference in two weeks will not be so accommodative in future meetings.

The Senate passed the debt ceiling legislation yesterday, now waiting for Biden to sign it, as he will.

May vehicle sales 15.0 mil down from April’s 16.1 mil.

At 9:30 am the DJIA opened +243, NASDAQ +116, S&P +33. 10 year 3.63% +3 bps. FNMA 6.0 30 year coupon -12 bps and -6 bps from 9:30 am yesterday.

There are no more data points today. Next week there isn’t much on the calendar, May ISM services sector index is the main event.

PRICES @ 10:00 AM

10 year note: 3.65% +5 bp

5 year note: 3.77% +7 bp

2 year note: 4.45% +11 bp

30 year bond: 3.86% +5 bp

Libor Rates: 1 month 5.163%; 3 month 5.499%; 6 month 5.647%; 1 year 5.725% (6/1/23)

30 year FNMA 6.0: @9:30 am 101.27 -12 bp (-6 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 100.02 -16 bp (-4 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.98 -9 bp (-5 bp from 9:30 am yesterday)

Dollar/Yuan: $7.0732 -$0.0213

Dollar/Yen: 139.24 +0.45 yen

Dollar/Euro: $1.0760 -$0.0003

Dollar Index: 103.47 -0.09

Gold: $1991.00 -$4.60

Bitcoin: 27,068 +202

Crude Oil: $71.89 +$1.79

DJIA: 33,447 +386

NASDAQ: 13,148 +47

S&P 500: 4249 +28

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.