CHM Blog

Overnight the 10 year note, generally quiet, increased 3 bps from yesterday’s close, at 9 am ET back to unchanged. MBS prices at 9 am unchanged. Very little economic data today; banks still in play but each day that passes less concerns as more details are revealed. The initial panic over Silicon Valley Bank and other west coast banks initially seen as widespread contagion with all regional banks, now as details emerge the fears are subsiding. Yesterday bank stocks found some support. Wall Street is warming up to banks again, with their stocks and bonds stabilizing and analysts increasingly emboldened to call a bottom on the selloff. Over the past two weeks, there have been no new bank failures. The main problems occurred in banks supposedly regulated by the San Francisco Fed, it’s clear it didn’t do its job.

Banks made bad decisions looking in hindsight. It isn’t over. The financial fears, money transferring from little to big banks is continuing. The financial media as usual stoking the fires. A lot of talk about the implications at the Fed with banks borrowing at the discount window adds to the angst. Historically, borrowing from the discount window implied there was a problem. In this case it still is considered a concern but so far not anymore banks going down. Some banks made bad decisions a year ago when interest rates were low, buying low yielding treasuries and MBSs, then the Fed ramped up rate increases to cool inflation and the value of the low yielding portfolios fell as interest rate spiked. Not wise enough to sell and take minor losses, some banks road the rates higher accumulating increased unrealized losses as regulators (SF Fed) looked the other way.

The 10 year last Friday broke a very key chart point at 3.40%, declining to 3.29%, it reversed yesterday and ended at 3.54%. An active debate now, some money manager thinking the Fed will curtail its inflation battle and stop or slow rate increases, while others like Black Rock, the country’s largest money manager taking the other side, the Federal Reserve will keep raising interest rates despite traders betting otherwise as fears of a banking crisis convulse markets “We don’t see rate cuts this year – that’s the old playbook when central banks would rush to rescue the economy as recession hit.” “We see a new, more nuanced phase of curbing inflation ahead: less fighting but still no rate cuts.”

Feb US trade deficit expected at -$90B, increased to -$91.6B; month/month imports -2.3%, exports -3.8%. Jan Case/Shiller home price index, -0.2% from -0.5% in Dec; year/year +2.5% from 4.6% and estimated at +3.7%. Jan FHFA house price index expected +0.2% reported at 0.2%.

At 9:30 am the DJIA opened +5, NASDAQ -23, S&P -6. 10 year at 9:30 am +2 bps to 3.56%. FNMA 6.0 30 year coupon at 9:30 am -2 bps from yesterday’s close and -8 bps from 9:30 am yesterday; the 5.5 coupon -2 bps and -10 bps from 9:30 am yesterday.

At 10 am March consumer confidence expected at 101.0 from 102.9, the index increased to 104.2 and Feb revised to 103.4.

At 1 pm Treasury will auction 5 year notes, yesterday’s 2 year auction was sloppy and not well bid.

PRICES @ 10:00 AM

10 year note: 3.55% +1 bp

5 year note: 3.63% +4 bp

2 year note: 4.02% +6 bp

30 year bond: 3.76% unch

Libor Rates: 1 month 4.852%; 3 month 5.143%; 6 month 5.161%; 1 year 5.061% (3/27/23)

30 year FNMA 6.0: @9:30 101.80 -2 bp (-8 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 100.73 -2 bp (-10 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 100.92 unch (-13 bp from 9:30 am yesterday)

Dollar/Yuan: $6.8770 -$0.0081

Dollar/Yen: 131.06 -0.51 yen

Dollar/Euro: $1.0825 +$0.0027

Dollar Index: 102.60 -0.26

Gold: $1963.60 +$9.80

Bitcoin: 27,043 unch

Crude Oil: $72.86 +$0.06

DJIA: 32,468 +36

NASDAQ: 11,692 -76

S&P 500: 3969 -9

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.