CHM Blog

June CPI data released at 8:30 am ET showed inflation even better than the low estimates. The CPI month/month was expected at +0.3%, as reported +0.2% but higher than in May at +0.1%, year/year thought to be +3.1%, the index declined to 3.0% and was lower than 4.0% in May. The core CPI month/month expected +0.3% came at +0.2% and down from +0.4% in May, year/year at 4.8% against 5.0% forecasts, and down from 5.3% in May. The takeaway from the report is that there is evidence of encouraging disinflation for both total and core CPI that should temper worries about the Fed raising rates again beyond its July FOMC meeting.

The report this morning even better than the low estimates. The question that dominates this morning, whether the Fed will pass on another rate increase at the next FOMC meeting? Expect varying opinions over the next few days, however we believe the Fed will follow-through with what most Fed officials are indicating. The pause at the last FOMC meeting allowed the Fed to consider the past rate increases and the impact to the economy. The pause does indicate that inflation decline does lag the Fed’s actions. The positive take-away from the data today does fortify the view that the Fed may be finished hiking rates after the FOMC meeting in two weeks. Inflation is the lowest since early 2021 after peaking at 9.1% in June 2022. Investors, traders, money managers, markets will struggle with the outlook that the Fed may begin lowering rates later this year; that was the discussion a month ago before Powell and most Fed officials made it clear more rate increases would be coming. CPI inflation is still +4.8%, the Fed’s goal 2.0%.

JPMorgan Asset Management Chief Global Strategist David Kelly warns the US labor market will eventually crack and disinflation is everywhere. Speaking on “Bloomberg Surveillance,” Kelly also says that when the Federal Reserve starts to ease policy they will have to cut rates aggressively.

Weekly MBA mortgage applications improved last week; apps increased 0.9%, purchase apps +1.8%, re-finance apps -1.3%.

At 9:30 am the DJIA opened +218, NASDAQ +158, S&P +38. 10 year note 3.91% -6 bps. FNMA 6.0 30 year coupon +42 bps, +39 bps from 9:30 am yesterday.

At 1 pm Treasury will sell $32B of 10 year notes (9yr/9 months)

At 2 pm The Fed Beige Book; the Fed’s details from all 12 Feed districts.

PRICES @ 10:00 AM

10 year note: 3.91% -6 bp

5 year note: 4.09% -14 bp

2 year note: 4.74% -14 bp

30 year bond: 3.99% -2 bp

30 year FNMA 6.0: @9:30 am 100.75 +42 bp (+39 bp from 9:30 am yesterday)

30 year FNMA 5.5: @9:30 am 99.39 +61 bp (+44 bp from 9:30 am yesterday)

30 year GNMA 5.5: @9:30 am 99.28 +45 bp (+49 bp from 9:30 am yesterday)

Dollar/Yuan: $7.1735 -$0.0367

Dollar/Yen: 139.06 -1.29 yen

Dollar/Euro: $1.1084 +$0.0074

Dollar Index: 100.95 -0.78

Gold: $1958.40 +$21.30

Bitcoin: 30,536 -50

Crude Oil: $75.92 +$1.09

DJIA: 34,514 +252

NASDAQ: 13,935 +175

S&P 500: 4482 +42

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.