CHM Blog

The 10 year note climbed 8 bps yesterday to 3.60%, the top of the trading range for the 10 since March 13th. MBS prices at 9 am ET +6 bps. Since the close last Thursday, the 10 has increased 16 bps, driven by renewed thoughts the Fed will increase the FF rate by 25 bps at the May meeting (May 3rd). Strong consumer sentiment, some increase in manufacturing, continuing comments from Fed officials has momentarily swung toward another hike.

The Fed itself isn’t sure how high rates will go, as always, data dependent. The FOMC minutes released last week indicated officials dialed back expectations of how high they’ll need to lift rates after a series of bank collapses roiled markets. The bank crisis appears to be over now, since the minutes recent Fed comments have tilted toward another 25 bp increase, then a pause. With over two weeks until the FOMC meeting expect officials to continue to paint a Picasso for what will occur. Fed staff data is forecasting a mild recession later this year.

The only data today, March housing starts and permits, both were weaker than in Feb. Starts in the US went down 0.8% month-over-month to a seasonally adjusted annualized rate of 1.42 million in March of 2023, following a downwardly revised 7.3% surge in February, but slightly beating market forecasts of 1.4 million. Starts in buildings with five units or more went down 6.7% to 542K while single-family housing starts, which account for the bulk of homebuilding, increased 2.7% to a three-month high of 861K. Starts fell in the Midwest (-23.6% to 133K) and the West (-28.1% to 258K) but soared in the Northeast (72.4% to 181K) and the South (6.8% to 848K)

Building permits in the United States tumbled 8.8 percent to a seasonally adjusted annual rate of 1.413 million in March 2023, partially reversing a 15.8 percent jump in February, a preliminary estimate showed. The number of permits missed market expectations of 1.45 million and remained close to December's 31-month low of 1.337 million, indicating housing demand remained subdued due to higher interest rates and rising consumer prices.

At 9:30 am the DJIA opened -17, NASDAQ +73, S&P +13. 10 year 3.59% -1 bp. FNMA 5.5 30 year coupon -8 bps and -29 bp from 9:30 am yesterday; the 6.0 30 year coupon at 9:30 am -11 bp and -15 bp from 9:30 am yesterday.

At 11 am Raphael Bostic, Atlanta Fed.

At 1 pm Fed governor Michelle Bowman will speak, the topic is crypto, considerations for a central bank digital currency.

The 10 so far has held 3.60%, the open this morning, at 10 am 3.57% -3 bp.

PRICES @ 10:00 AM

10 year note: 3.58% -2 bp

5 year note: 3.69% -2 bp

2 year note: 4.21% +1 bp

30 year bond: 3.80% -1 bp

Libor Rates: 1 month 4.951%; 3 month 5.265%; 6 month 5.395%; 1 year 5.420% (4/17/23)

30 year FNMA 6.0: @9:30 am 101.44 -11 bp (-15 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 100.23 -8 bp (-29 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.34 -12 bp (-19 bp from 9:30 am yesterday)

Dollar/Yuan: $6.8774 -$0.0025

Dollar/Yen: 134.14 -0.36 yen

Dollar/Euro: $1.00959 +$0.0030

Dollar Index: 101.86 -0.24

Gold: $2008.40 +$1.40

Bitcoin: 30.410 +937

Crude Oil: $80.47 -$0.36

DJIA: 33,866 -121

NASDAQ: 12,179 +21

S&P 500: 42155 +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.