May 25th, 2023 8:33 AM by Richard Sardella MLO.100007700/NMLS 233568
No movement on the debt ceiling. House speaker McCarthy stayed late last night and said no progress had been achieved. One of the negotiators said there are no meetings scheduled now. There had been a building optimism that a deal would be achieved this week, that is questionable now. A rapidly moving target so markets have to take it day by day. It will get done before Treasury has to default, the details though may not sit well with investors. Yesterday the stock indexes took a hit, in pre-opening trading this morning the indexes were lower again. There are no data points today.
This afternoon at 1 pm Treasury will sell $43B of 5 year notes, yesterday’s 2 year note auction went quite well with strong bidding from foreign investors (indirects).
At 2 pm the Fed will release the minutes from the May FOMC meeting; always interesting but never any major surprises that are not already known.
Running for cover, investors worried about the debt ceiling potentially leading to a default as our wonderful politicians standing pat on the differences between Democrats and Republicans. So far there isn’t any panic in US financials, the overwhelming belief that there will be an agreement, that there will be no default. No panic but investors are getting antsy. As each day passes the stress will build. We are closing in on a long weekend, the bond market will close at 2 pm Friday and closed on Monday for Memorial day; the closer we get to the end of the week the stress will build on traders and investors. JPMorgan Chase’s Jamie Dimon warned earlier this month that even going to the brink is dangerous, with unpredictable consequences. “The closer you get to it, you will have panic,” he said in a May 11 interview with Bloomberg Television. “The other thing about markets is that, always remember, panic is the one thing that scares people — they take irrational decisions.”
At 9:30 am the DJIA opened -104 after slipping 231 yesterday, NASDAQ -76 from -162 yesterday, S&P -20 from -47 yesterday.10 year note at 9:30 am 3.69% -1 bp from yesterday. FNMA 6.0 30 year coupon at 9:30 am -5 bps and +1 bp from 9:30 am yesterday, the 5.5 coupon -5 bps and +7 bps from 9:30 am yesterday.
PRICES @ 10:00 AM
10 year note: 3.70% unch
5 year note: 3.76% +2 bp
2 year note: 4.32% +4 bp
30 year bond: 3.96% +1 bp
Libor Rates: 1 month 5.138%; 3 month 5.396%; 6 month 5.504%; 1 year 5.522% (5/23/23)
30 year FNMA 6.0: @9:30 am 101.09 -5 bp (+1 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 99.80 -5 bp (+7 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.77 -5 bp (+2 bp from 9:30 am yesterday)
Dollar/Yuan: $7.0501 -$0.0066
Dollar/Yen: 138.79 +0.21 yen
Dollar/Euro: $1.0774 +$0.0003
Dollar Index: 103.60 +0.11
Gold: $1975.50 +$1.00
Bitcoin: 26,439 -777
Crude Oil: $74.31 +$1.40
DJIA: 32,870 -185
NASDAQ: 12,475 -85
S&P 500: 4117 -29
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.