CHM Blog

At 8:30 am June retail sales was released; sales expected +0.5% increased just 0.2%, ex vehicles expected +0.3% increased 0.2%. Offsetting the less than expected sales, May sales were revised from +0.3% to +0.5%. The report in the past was generally a good indicator of consumer appetites but it has been less reliable recently because consumers are spending more on services and not as much on hard goods. Sales declined at home centers, department stores and gasoline stations. Obviously, the decline in gas prices helps consumers spend more on other expenses. Total consumer spending is still rising faster than inflation.

Markets got a little boost overnight on comments from ECB rate hawk Klaas Knot said after next week’s ECB meeting the outlook for more increases is anything but guaranteed. ECB is expected to increase rates at the meeting and like the Fed the outlook for more increases is cloudy. Inflation is slowing, the economic outlook becoming more tenuous. The Fed will increase the FF rate by 25 bps next week at the FOMC meeting (the 26th); after that the debate continues and is as the phase goes, data dependent. Today’s softer than expected retail sales is a slight boost to the idea floating that after next week the Fed will be finished increasing rates.

At 9:15 am June industrial production declined more than forecasts. The estimates were for production 0.0% as reported -0.5%; manufacturing expected 0.0% down 0.3%. Capacity utilization (factory use) expected at 79.5% from 79.4% in May fell to 78.9%.

At 9:30 am the DJIA opened -24, NASDAQ -35, S&P -6. 10 year 3.77% -4 bps. FNMA 6.0 30 year coupon at 9:30 am +16 bps from yesterday’s close and +38 bp from 9:30 am yesterday.

Banks continue to report their Q2 results, Morgan Stanley reported profit down 13%; NY Mellon reported higher profit from a year ago; BofA reported profits rose 19% Yesterday we commented on the bank’s issues with holding mortgage securities marked as hold to maturity that would not show up on its headlines; PNC, the first regional bank reporting saying profits were flat from a year ago. Tomorrow, Goldman Sachs, M&T Bank, Citizens Bank, and US Bancorp.

At 10 am July NAHB housing market index, expected at 56 from 55, in line, up 56.

PRICES @ 10:00 AM

10 year note: 3.77% -4 bp

5 year note: 3.96% -6 bp

2 year note: 4.72% -3 bp

30 year bond: 3.90% -3 bp

30 year FNMA 6.0: @9:30 am 101.19 +16 bp (+36 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.91 +11 bp (+30 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.88 +11 bp (+25 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1815 +$0.0095

Dollar/Yen: 138.60 -0.11 yen

Dollar/Euro: $1.1226 -$0.0013

Dollar Index: 99.98 +0.14

Gold: $1972.70 +$16.30

Bitcoin: 29.812 -120

Crude Oil: $74.96 +$0.81

DJIA: 34,409 +224

NASDAQ: 14,215 -30

S&P 500: 4530 +7

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.