CHM Blog

Stock indexes at 9 am ET little changed from Friday’s strong rally. 10 year at 9 am 3.49% +6 bps, MBS prices -15 bps. Investors still pondering last Friday’s April employment data, some concerns that the higher than expected job growth will push the Fed to another rate increase in June instead of a pause that most were thinking. We doubt the Fed would increase tightening just because more jobs were reported, March jobs were revised lower balancing the more than expected April numbers. Non-farm payrolls expected +178K increased 253K (March revised from 236K to 165K), private jobs expected 153K increased 230K (March revised from 189K to 123K). The revised March jobs should temper the stronger April data, the average job gains over the last two months 209K; private jobs, over the last two months 176K; and it's at its lowest level in 70 years. Wages did increase more than forecasts, average hourly earnings expected unchanged at +0.3% increased 0.5%, year/year thought to be 4.2% increased 4.4%. At the end of the day and beginning this morning the 10 year note remains at or above 3.40%.

This week’s main data on Wednesday and Thursday with April CPI and PPI.

The CFTC (Commodity Futures Trading Commission) issued a report showing hedge funds using the basis trade to bet by buying cash treasuries while simultaneously selling treasury futures against the long cash position. The report was as of May 2nd. The trade has the potential of keeping markets in narrow ranges. Janet Yellen warning about the debt ceiling coming to a crisis with Treasury running out of money to pay debts, and warned against invoking the 14th amendment that allows the president to continue to pay its debts.

At 9:30 am the DJIA opened +68, NASDAQ –9, &P +4.10 year 3.50% +6 bps. FNMA 6.0 30 year coupon -23 bps from Friday’s close and -25 bps from 9:30 am Friday; the 5.5 coupon -22 bps and -19 bps from 9:30 am Friday.

The debt ceiling, job growth, inflation data on Wednesday and Thursday, new 10 year note and 30 year bond auctions Wednesday and Thursday. A lot to work through, regional banks under the microscope with details oozing out roiling markets on any news. Now that the FOMC meeting is over Fed officials will be commenting and speaking this week.

PRICES @ 10:00 AM

10 year note: 3.50% +6 bp

5 year note: 3.46% +5 bp

2 year note: 3.95% +5 bp

30 year bond: 3.82% +6 bp

Libor Rates: 1 month 5.104%; 3 month 5.337%; 6 month 5.353%; 1 year 5.200% (5/5/23)

30 year FNMA 6.0: @9:30 am 101.69 -23 bp (-25 bp from 9:30 am Friday)

30 year FNMA 5.5: @9:30 am 100.69 -22 bp (-19 bp from 9:30 am Friday)

30 year GNMA 5.5: @9:30 am 100.44 -14 bp (-19 bp from 9:30 am Friday)

Dollar/Yuan: $6.9162 +$0.0056

Dollar/Yen: 134.93 +0.08 yen

Dollar/Euro: $1.1036 +$0.0018

Dollar Index: 101.12 -0.10

Gold: $2028.10 +$4.30

Bitcoin: 27,879 -1,047

Crude Oil: $73.21 +$1.83

DJIA: 33,634 -40

NASDAQ: 12,197 -36

S&P 500: 4134 -2

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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MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.