CHM Blog

Last Friday the 10 year note increased to its next key technical support at 3.90%. it held and the 10 backed off to close at 3.81% -5 bps, this morning the 10 began at 3.89% +8 bps. MBS prices at 8:30 am ET opened down 42 bps. Stock indexes in pre-opening futures markets weaker, the DJIA -126.

Both existing and new home sales this week but for traders the main events are on Friday with Jan PCE and the U. of Michigan consumer sentiment index. Wednesday the minutes from the Jan FOMC meeting, markets focus on it for any additional clues although generally nothing earth-shaking comes from them. For all the angst within markets over what the Fed will do moving forward, every Fed official and Jerome Powell have made it clear rates will inch higher until inflation drops to 2.0%, that implies at least three more 25 bp increases.

Wal-Mart today announcing it will spend $1B for pay increases. Consumers remain resilient to all the negative outlooks and higher interest rates. Job growth continues, wages are increasing, the fed has a real problem trying to cool inflation as long as jobs are plentiful, and wages continue to inch higher. Tech companies continue to cut jobs by the thousands countering the increases in the service sector. On Friday, the Feb consumer sentiment index will be reported.

At 9:30 am the DJIA opened -288, NASDAQ -153, S&P -39. 10 year at 9:30 am 3.90%. FNMA 5.5 30 year coupon at 9:30 am -55 bp from Friday’s close and -23 bps from 9:30 am Friday.

At 9:45 am Feb purchasing mgrs. index; manufacturing expected at 47.3, services 47.2; as reported the composite at 50.2, manufacturing 47.8, services 50.5. On the release the 10 year note increased from 3.90% to 3.94%.

At 10 am Jan existing home sales, expected at 4.10 mil, as reported 4.00 mil.

PRICES @ 10:00 AM

S&P 500: 4031 -48

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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