March 13th, 2023 10:06 AM by Richard Sardella MLO.100007700/NMLS 233568
The failure of Silicon Valley Bank last week is reverberating this morning. The 10 year note began the day at 3.45% down -25 bps from Friday, Friday the 10 declined 22 bps. The 2 year note, the guide to what the Fed may do, last Thursday at 4.89%, this morning 4.02%. Another bank in turmoil, First Republic Bank also in trouble, its stock down 65% this morning. Another bank went down over the weekend, Signature Bank in New York. Pershing Square founder Bill Ackman said more banks will likely fail. “The investors who didn’t adequately oversee their banks will be zeroed out and the bondholders will suffer a similar fate,” turmoil reigns this morning.
There is strong selling in other questioned banks.
Regional lenders dominate the leader board for most-sold stocks in the US premarket:
First Republic Bank sank 65%
Western Alliance Bancorp lost 60%
PacWest Bancorp was down 46%
Finwise Bancorp tumbled 40%
Zions Bancorp. slid 24%
Metropolitan Bank dropped 23%
BankUnited Inc. was off 21%
Inflation data was going to be the focus this week until the bank issue, 50 bp increase in the FF rate had gained momentum, now the Fed may not move rates at all. It will require time for investors and traders to get a handle on how deep the banking system may be impacted. Last Friday most believed SVB was an outlier, today not much confidence in that view. The President spoke at 9 am assuring depositors their money is safe.
At 9:30 am the DJIA opened -261, NASDAQ -94, S&P -38. The 10 year 3.48% -21 bp. FNMA 6.0 30 year coupon +63 bps, +60 bp from 9:30 am Friday; 5.5 coupon +83 bps and +53 bp from 9:30 am Friday.
Uncertainty and volatility will dominate this week. The FOMC next week now in question. Regulators are going to be all over other banks. Markets sitting on a knife edge this morning. In the longer outlook this situation won’t likely last long. The Fed and interest rate increases will keep traders edgy.
PRICES @ 10:00 AM
10 yr note: 3.50% -20 bp
5 yr note: 3.66% -30 bp
2 Yr note: 4.15% -45 bp
30 yr bond: 3.62% -9 bp
Libor Rates: 1 mo 4.799%; 3 mo 5.138%; 6 mo 5.428%; 1 yr 5.738% (3/10/23)
30 yr FNMA 6.0: @9:30 am 101.59 +63 bp (+40 bp from 9:30 am Friday)
30 yr FNMA 5.5: @9:30 am 100.53 +83 bp (+53 bp from 9:30 am Friday)
30 yr GNMA 5.5: @9:30 am 100.19 +17 bp (-6 bp from 9:30 am Friday)
Dollar/Yuan: $6.8645 -$0.0418
Dollar/Yen: 132.92 -2.08 yen
Dollar/Euro: $1.00703 +$0.0062
Dollar Index: 103.86 -0.72
Gold: $1913.30 +$46.10
Bitcoin: 22,599 +1202
Crude Oil: $73.77 -$2.91
DJIA: 31,984 +74
NASDAQ: 11,143 +4
S&P 500: 3854 -8
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.
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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.