CHM Blog

Markets waited a week for February CPI data, knowing the history of increased volatility every time it hits. The report at 8:30 am ET was in line with forecasts and there was no immediate movement. After the huge miss in January when CPI data was released showing inflation increased more than what was expected sent rates higher and MBS prices crumbling, today a yawner for a change. CPI month/month expected +0.4% reported at +0.4% although it increased from January’s +0.3%, year/year CPI +3.2% against estimates of +3.1% and unchanged from January. The core CPI month/month +0.4% with forecasts of 0.3% and unchanged from January; year/year core declined from 3.9% to 3.8% with forecasts of +3.7%. Inflation didn’t increase on the core data, a big relief and didn’t change the outlook for Fed rate cuts by the June FOMC meeting.

Overall inflation month/month +0.4% unchanged from January’s increase but more than +0.3% that was penciled in. By 9 am markets began to take on a little water, the 10 year note +4 bps; MBS prices -6 bps from yesterday’s close. The February inflation held January’s increases. Once again, the index for shelter (+0.4%) was the largest factor in the monthly increase for core CPI and it accounted for roughly two thirds of the year-over-year increase. Excluding shelter, CPI was up just 1.8% year-over-year.

At 9:30 am the DJIA opened +128, NASDAQ +113, S&P +23. 10 year at 9:30 am increased to 4.14% +4 bps from yesterday. FNMA 6.0 30 year coupon at 9:30 am -9 bps from yesterday’s close and -5 bps from 9:30 am yesterday.

At 1 pm Treasury will auction $39B of 10 year notes. Yesterday’s 3 year note went well with decent demand.

At 2 pm Treasury will release the February budget that increased from January. February budget expected at -$29.8B from -$21.9B in January.

The next data of consequence comes on Thursday with February PPI, retail sales, weekly jobless claims.

PRICES @ 10:00 AM

10 year note: 4.15% +5 bp

5 year note: 4.14% +5 bp

2 year note: 4.59% +3 bp

30 year bond: 4.31% +5 bp

30 year FNMA 6.0: @9:30 am 100.97 -9 bp (-5 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 102.16 -6 bp (-3 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 100.03 -3 bp (-10 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1801 -$0.0043

Dollar/Yen: 147.85 +0.91 yen

Dollar/Euro: $1.0909 -$0.0018

Dollar Index: 103.16 +0.29

Gold: $2,136.00 -$25.60

Bitcoin: 72,132 +111

Crude Oil: $77.62 -$0.31

DJIA: 38,874 +105

NASDAQ: 16,102 +83

S&P 500: 5140 +22

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.