CHM Blog

This morning the 10 year note began back below 4.50%, the level we see as critical from a technical perspective. Prior to 8:30 am ET the note traded at 4.50%, after the 8:30 am data down to 4.45% -8 bps from yesterday and the close on Tuesday. MBS prices began +32 bps after declining 21 bps yesterday.

Weekly jobless claims at 8:30 am 231K +13K, the highest weekly claims in three months, the forecasts were 222K. The 4-week average for claims at 220.25K up from 212.50K the prior week. Continuing claims 1.83 million at a seven-month high. The increasing jobless claims pose a concern for the economic outlook, increasing claims imply it is taking longer for workers to find jobs. Unemployment remains historically low, markets still expecting that soft landing.

October import and export prices, while not a headline report on inflation nevertheless added to the view inflation is slowing. Import prices expected +0.3% month/month declined -0.8% (if fuel is set aside, import prices declined by a smaller 0.2% last month), year/year expected -1.7% declined 2.0%. Export prices thought to be -0.2% month/month declined 1.1%, year/year exports declined 4.9% down from -4.3% in Sept.

November Philadelphia Fed manufacturing index only gets attention because it’s a Fed produced report, the index expected –11.0 reported -5.9, it’s the 16th negative reading in the past 18 months. The six-month business outlook fell from 9.2 in October to negative 2.1 this month, which was the first negative reading since May.

At 9:15 am October industrial production and capacity utilization; forecasts for production -0.3% declined 0.9%. Factory use also weakened, expected at 79.4% from 7.5% in Sept (revised from 79.6%) dropped to 78.9%.

At 9:30 am the DJIA opened -84, NASDAQ -44, S&P -5. 10 year at 9:30 am 4.47% -6 bps. FNMA 6.5 30 year coupon at 9:30 am -25 bps from yesterday’s close and +30 bp from 9:30 am yesterday.

At 10 am the November NAHB housing market index, the overall index expected unchanged from October at 40.0; the index dropped to 34. The index survey occurred prior to Tuesday’s strong decline in mortgage rates (.7.45%).

Bank of England policy maker Megan Greene saying today the neutral rate of interests will stay higher than markets presently believe. We have noted it here a few times recently that interest rates won’t see those lows of a year ago again. “The notion that the long run neutral rate might be a bit higher, and the natural rate of unemployment might be a bit higher, isn’t something everyone’s grappling with,”… “it just suggests that the world’s going to look a little bit different once the dust all settles than it did before the pandemic. It suggests we might need to be restrictive for longer.”

PRICES @ 10:00 AM

10 year note: 4.45% -8 bp

5 year note: 4.44% -8 bp

2 year note: 4.85% -9 bp

30 year bond: 4.62% -8 bp

30 year FNMA 7.0: @9:30 am 102.10 -2 bp (+19 bp from 9:30 am yesterday)

30 year FNMA 6.5: @9:30 am 101.16 +25 bp (+30 bp from 9:30 am yesterday)

30 year FNMA 6.0: @9:30 am 99.64 +36 bp (+39 bp from 9:30 am yesterday)

30 year GNMA 6.0: @9:30 am 100.12 +33 bp (+50 bp from 9:30 am yesterday)

Dollar/Yuan: $7.2445 -$0.0023

Dollar/Yen: 150.79 -0.60 yen

Dollar/Euro: $1.0868 +$0.0021

Dollar Index: 104.28 -0.12

Gold: $1977.20 +$12.90

Bitcoin: 33,683 -938

Crude Oil: $74.49 -$2.17

DJIA: 35,003 +7

NASDAQ: 14,116 +14

S&P 500: 4511 +8

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.