After a week full of key data, today nothing but LEI which doesn’t get much notice.
Unlike this week, next week has less to focus on, no direct inflation data. Housing reports including existing home sales and new home sales. The FOMC minutes from the May 1st meeting.
News from the wires: Recent national data suggests that more sellers are thinking about entering the market, as the crucial spring selling season reaches its peak period. More than two-thirds of consumers surveyed by Fannie Mae in April said it was a good time to sell a home, the highest level since July 2022. Nationally, active listings in April were 36% below typical pre-pandemic levels, according to Realtor.com. News Corp, parent of the Journal, operates Realtor.com.(WSJ)
Still feeling the impact of COVID when it comes to rates. COVID caused rates to decline to levels unsustainable in a normal world. That era is over as most now realize but still have difficulty believing rates will work back to the artificial lows. Reminds of the housing market disaster in the early 2000’s when anything thrown on the wall stuck, liar loans 1 year ‘teaser rates’ as low as 2.0%, no underwriting, make up your own income with no verification. Consumers (would be home buyers and sellers) still hoping mortgage rates will decline back to levels of 2 years ago and that isn’t in the cards now.
At 9:30 am the DJIA opened +49, NASDAQ +12, S&P +4. 10 year note +2 bps at 4.40%. FNMA 6.0 30 year coupon -2 bp from yesterday’s close but -41 bp from 9:30 am yesterday.
Today should be quiet.
PRICES @ 9:45 AM
10 year note: 4.41% +3 bp
5 year note: 4.43% +2 bp
2 year note: 4.81% unch
30 year bond: 4.55% +4 bp
30 year FNMA 6.0: @9:30 am 100.45 -2 bp (-41 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.80 -7 bp (-23 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.55 -1 bp (-22 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2253 +$0.0065
Dollar/Yen: 155.78 +0.38 yen
Dollar/Euro: $1.0851 -$0.0018
Dollar Index: 104.61 +0.15
Gold: $2,406.60 +$21.10
Bitcoin: 66,013 +845
Crude Oil: $79.30 +$0.07
DJIA: 39,891 +23
NASDAQ: 16,699 unch
S&P 500: 5297 +1
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.
This morning prior to 8:30 am ET the 10 year note traded unchanged, at 8:30 am weekly jobless claims expected at 220K were 222K -10K from the previous week. The four-week moving average, which reduces week-to-week volatility, rose by 2,500 to 217,750. Continuing claims increased to 1.794 million from 1.781 million, the highest in the last month. The week prior claims increased to the highest level in eight months at 231K from 212K sending rates lower, adding to the view the economy is slowing.
April import prices expected +0.2% increased 0.9%, export prices thought to be +0.2%, increased 1.1%. Year/year imports increased 1.1% from +0.4% in March, year/year export prices -1.0% from -1.4%. The increases over forecasts leans a little against inflation declining.
April housing starts estimated at 1.435 million declined to 1.360 million; permits slid to 1.440 million against estimates at 1.480 million. Permits the lowest since December 2022. Permits for units in buildings with five units declined 9.1% to a rate of 408K, reaching the lowest level since October 2020, and single-family permits went down by 0.8% to an eight-month low of 976 million declines in permits in the Midwest (-18.1% to 167 thousand), and the West (-14.4% to 292 thousand), while increases were reported in the South (4.2% to 827 thousand), and Northeast (5.5% to 154 thousand). Source: U.S. Census Bureau.
May Philadelphia Fed manufacturing index doesn’t hold much interest, but the index expected at 7.8 declined to 4.5.
April industrial production unchanged in April against estimates of +0.1%, manufacturing output thought to be +0.35 declined 0.3%; capacity utilization at 78.4% from revised 78.5% in March.
At 9:30 am the DJIA opened +39, NASDAQ -12, S&P +3. 10 year at 9:30 am 4.35% +1 bp. FNMA 6.0 30 year coupon at 9:30 am -1 bp from yesterday’s close and +8 bp from 9:30 am yesterday. The 6.5 coupon -14 bps from yesterday and +25 bp from 9:30 am yesterday.
There are three Fed officials scheduled to comment this morning, Governor Barr, Richmond’s Barkin and Philadelphia Fed’s Harker. Fed Bank of New York President John Williams told Reuters the latest US inflation data confirm price pressures are gradually easing — but he still needs more evidence to adjust rates. That is likely the theme the other Fed officials will echo today. J Powell has also remarked that he will need more evidence inflation is on a path lower before he considers rate cuts. Markets and traders still hold out for at least two cuts later this year, although there are many that also hold that the Fed won’t cut rates this year.
PRICES @ 10:00 AM
10 year note: 4.37% +3 bp
5 year note: 4.40% +5 bp
2 year note: 4.70% +5 bp
30 year bond: 4.51% unch
30 year FNMA 6.0: @9:30 am 100.76 -1 bp (+8 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 102.03 -14 bp (+25 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.77 -4 bp (+7 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2191 unch
Dollar/Yen: 155.48 +0.59 yen
Dollar/Euro: $1.0857 -$0.0028
Dollar Index: 104.56 +0.21
Gold: $2,377.80 -$17.10
Bitcoin: 66,278 +190
Crude Oil: $79.74 +$1.11
DJIA: 39,907 -1
NASDAQ: 16,764 +21
S&P 500: 5312 +4
Traders and markets waited two weeks for current inflation data, yesterday April PPI data revealed inflation at the wholesale level increased, but PPI isn’t where markets look and traders don’t give it much concern on inflation as consumer prices do.
At 8:30 am ET April consumer price index confirmed what was expected, inflation declined from March. The release was right on forecasts, itself unusual. Inflation declined 0.1% from March in every measurement. Month to month expected +0.3%, year/year expected +3.4% reported at 3.4%. It was the same with the core data, month/month +0.3%, year/year +3.6%, both as estimated. The initial reaction took the 10 year note down to 4.35% -9 bps and MBS prices jumped 38 bps.
Inflation declined from 3.8% year/year to 3.6%, a nice decline but still inflation is well above what the Fed is looking for. The Fed’s key inflation read doesn’t hit until May 31st when the PCE inflation is released.
Also supportive for rates, April retail sales were softer than forecasts and adding to our view the consumer is increasingly less optimistic about their circumstances. Month/month sales expected +0.4% was 0.0% from March and March revised from +0.7% to +0.6%. Excluding vehicles +0.2% as forecast although down from revised March +0.9% from +1.1% originally reported, Ex vehicles and gas expected +0.1% reported -0.1%. Every measurement of consumers reported recently have shown consumers are becoming less optimistic, consumer credit card debt slowed in the recent data, both consumer measurements much weaker than in the prior month.
At 9:30 am the DJIA opened +164, NASDAQ +92, S&P +25. 10 year note at 9:30 am 4.38% -6 bps, FNMA 6.0 30 year coupon at 9:30 am +38 bps from yesterday’s close and +41 bps from 9:30 am yesterday, the 6.5 coupon +10 bps from yesterday and +11 bp from 9:30 am yesterday.
At 10 am May NAHB housing market index expected unchanged from April at 51.0 was disappointing, the index declined to 45, the lowest level in four months. The gauge for current sales conditions fell six points to 51, the component measuring sales expectations in the next six months fell nine points to 51 and the gauge charting traffic of prospective buyers declined four points to 30.
Early this morning weekly MBA mortgage applications improved from the prior week, +0.5% on the composite, purchase apps though declined 1.7% after increasing 1.8% the prior week, re-finance apps +4.7% from 4.5% the prior week.
Most of the comments after CPI from media reporting two rate cuts this year. Month over month consumer prices the lowest in six months encouraging the cuts. Core inflation based on today’s CPI still at 3.6%, much higher than what the Fed is looking for.
10 year note: 4.39% +5 bp (low this morning 4.35%)
5 year note: 4.40% -6 bp
2 year note: 4.77% -5 bp
30 year bond: 4.55% -4 bp
30 year FNMA 6.0: @9:30 am 100.69 +38 bp (+41 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.78 +10 bp (+11 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.70 +36 bp (-2 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2220 -$0.0116
Dollar/Yen: 155.42 -1.00 yen
Dollar/Euro: $1.0850 +$0.0030
Dollar Index: 104.61 -0.41
Gold: $2,367.60 +$7.70
Bitcoin: 64,459 +2906
Crude Oil: $76.94 -$1.08
DJIA: 39,691 +133
NASDAQ: 16,581 +70
S&P 500: 5270 +24
Prior to 8:30 am ET the 10 year note rate at 4.48% -1 bp, MBS prices +6 bps from yesterday’s close.
April PPI at 8:30 am. Another disappointment on inflation. Month/month PPI expected +0.3% increased 0.5%, year/year +2.2% as expected but up from +2.1% in March. The core, month/month +0.5% with forecasts of +0.2%, year/year expected +2.3% increased to 2.4%. Ex core and trade services month/month +0.4% from +0.2% year/year +3.1% from +2.8% in March, three quarters of the increase in final demand prices was due to a 0.6% increase in the index for final demand services. The initial reaction pushed the 10 year note to 4.52% +3 bps but immediately retreated to 4.50% +1 bps; MBS prices declined 11 bps but bounced back to -8 bps.
Fed Chair Powell will be speaking at the Annual General Meeting, Foreign Bankers’ Association in Amsterdam at 10 am. Wholesale prices continue to increase although markets today will be more focused on tomorrow’s CPI (consumer price index). Producer prices are a look in the future, will producer prices foretell consumer prices? To some extent but where the rubber meets the road for inflation is at the consumer level released tomorrow. The jump in PPI won’t get traders too excited, by 9 am rates traded unchanged from yesterday. Tomorrow April CPI is expected to show declines in both the overall and core.
Earlier this morning April NFIB small business index rose to 89.7 in April 2024, slightly recovering from a more than 12-year low of 88.5 in March and beating forecasts of 88.1. Although down 3 points from March, inflation remained the primary concern for 22% of owners surveyed. “Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees. Overall, small business owners remain historically very pessimistic," said Bill Dunkelberg, NFIB Chief Economist.
Home builders are building homes for rent with mortgage rates and prices too high for potential buyers. In 2023, 93,000 new single-family homes for rent were completed, according to estimates from housing consulting firm John Burns Research and Consulting. That was 39% more rental homes than in 2022, and the most in any year ever. The breakneck pace is poised to continue this year before easing by 2025. They are up especially in outer-ring suburbs of Arizona, Texas and Florida cities, and in other places with fast population and job growth.
At 9:30 am the DJIA opened -7, NASDAQ +5 bp, S&P +2 bps. The 10 at 9:30 am -2 bps at 4.47%. FNMA 6.0 30 year coupon at 9:30 am +11 bps from yesterday’s close and+5 bps from 9:30 am yesterday, the 6.5 coupon +6 bps and unchanged from 9:30 am yesterday.
Technically, the 10 year note hasn’t been able to break below its 40-day average since early March, at 10 am trading right on the 40. The 9-day RSI still slightly bearish. Technicals are important but today and tomorrow’s CPI will be more important than our short-term indicators.
10 year note: 4.46% -3 bp
5 year note: 4.47% -3 bp
2 year note: 4.83% -4 bp
30 year bond: 4.61% -3 bp
30 year FNMA 6.0: @9:30 am 100.28 +11 bp (+5 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.67 +6 bp (unchanged from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.38 +22 bp (+8 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2334 unch
Dollar/Yen: 156.48 +0.26 yen
Dollar/Euro: $1.00814 +$0.0024
Dollar Index: 105.50 -0.17
Gold: $2,354.20 +$11.20
Bitcoin: 61,851 -1273
Crude Oil: $78.46 -$0.66
DJIA: 39,506 +74
NASDAQ: 16,403 +14
S&P 500: 5226 +4
Neutral
Proposed legislation may have no effect on home prices
The drive to bring down-home prices is not going well, according to Realtor.com’s Keith Griffith, who reports that the proposed congressional legislation to ban Wall Street hedge funds from snapping up single-family homes would likely have little impact on home prices.
“With their small national market share, claims that large institutions inflate house prices seem exaggerated,” wrote Capital Economics Property Economist Thomas Ryan in a client note on Thursday. “In our view, lawmakers are looking for a new scapegoat to blame for unaffordable housing.”
Griffith cites data from the latest Realtor.com investor report that noted that large institutions with 50 or more homes represented only 13% of all investor homebuyers as of September. Instead, small “mom and pop” landlords with fewer than 10 properties made up the significant majority of investor home purchases.
The analysis comes as Democrats in the U.S. House and Senate push legislation that would force large institutional investors to sell off their single-family homes to family buyers. The “End Hedge Fund Control of American Homes Act” would impose steep penalties on hedge funds that own any number of single-family homes, as well as other institutions that own more than 50 homes.
“The housing in our neighborhoods should be homes for people, not profit centers for Wall Street. Yet, in every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” said sponsor Sen. Jeff Merkley, a Democrat from Oregon, when introducing the bill in December.
Bipartisanship on this issue is not altogether lacking however. Some conservatives have also voiced their concerns about Wall Street’s role in the housing market, including Texas Gov. Greg Abbott, a Republican, who called for the state’s legislature to consider new laws restricting institutional home-buying. While he says he strongly supports free markets, he also admits that this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home.
Affordability is no stranger nationwide, especially for first-time buyers, but Ryan argued that hedge funds are not to blame, saying banning them from the market may not have a significant impact. “Lawmakers’ current efforts to restrict institutional buying of single-family homes won’t put downward pressure on house prices if enacted, as their market share is minimal,” he says.
Total investor purchases of single-family homes peaked in 2022. Then it decreased sharply as interest rates began to rise, according to the Realtor.com data cited by Ryan. “Even at their peak in February 2022, investor purchases of single-family homes accounted for just 13.1% of all sales, falling to 10.8% in the first three quarters of 2023,” says Griffith.
Small investors account for most investor purchases of homes, he adds. “In the first three quarters of 2023, small investors accounted for 67.6% of investor purchases, while large investors accounted for 15.3%. Medium investors, with 10 to 50 homes, accounted for the remaining share.”
Ryan conceded that the Southern markets, where investors have concentrated their home buying in recent years, have seen outsized price growth. But he argued that it’s more likely that large investors are concentrating their buying in hot markets with higher returns, rather than the investor purchases driving up prices.
Realtor, TBWS
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are moving sideways today. The MBS market worsened by -4 bps last week. This was not enough to increase mortgage rates or fees. The market experienced moderate volatility last week.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Retail Sales and 3) The Fed.
1) Inflation: We will get both PPI and CPI this week with CPI getting more weight among bond traders. However, its really about which data set has the biggest deviation from market expectations. CPI is expected to increase on a MOM basis, the larger the increase - the worse it will be for rates. However, if we get a miss to the downside - MBS will rally.
2) Retail Sales: We get Retail Sales on Wednesday. Last week's Consumer Credit Report showed a much smaller than expected increase in revolving debt, however it was at the highest debt level carried by consumers ever.
3) The Fed: Here is this week's schedule:
05/13 Mester
05/15 Kashkari
05/16 Harker, Mester, Bostic
This Week's Potential Volatility: High
This morning markets are moving sideways as markets wait for inflation data. Volatility has started low but will increase with the weeks inflation reports.
Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Unlike last week, this week is packed with economic releases. Trading was choppy in a very confined range last week; the 10 year note yield was unchanged on the week, MBS prices generally unchanged.
There are no economic reports Monday. Inflation data Tuesday and Wednesday are keys. This morning rates are improving, driven by the current estimates for PPI and CPI inflation forecasts, PPI not much but the CPI forecasts expect inflation to have declined a little from March to April.
The forecasts for PPI are for increases; the forecasts for the more sensitive CPI are lower, good news if it happens that way on Wednesday. Beside inflation data tomorrow and Wednesday Fed Chair Powell will be speaking tomorrow at the Annual General Meeting, Foreign Bankers’ Association, Amsterdam.
The pendulum has swung from rate cuts on the way to rate cuts not going to happen until later this year. Now the pendulum is back to its center, the only thing holding back the Fed now is softer inflation that based on the estimates will show inflation declining on the consumer price index (CPI). Weekly jobless claims last week jumped to the highest filings in nine months. Both the University of Michigan consumer sentiment index and the Conference boards consumer confidence index indicated consumers are increasingly concerned about their situations.
At 9:30 am the DJIA opened +95, NASDAQ +62, S&P +13. 10 year note at 9:30 am -3 bps at 4.47%. FNMA 6.0 30 year coupon at 9:30 am +14 bps from Friday’s close and +8 bps from 9:30 am Friday; the 6.5 coupon +11 bps and+7 bps from 9:30 am Friday.
There isn’t any news today, the CPI estimates keeping the bond market steady. Recent inflation reports have not been good for rates, last month CPI was higher than forecasts sending rates higher, March CPI overall expected +0.3% month/month increased 0.4%, year/year overall +3.5% as expected but up from 3.2% in February. The core CPI month/month reported +0.4% unchanged from February but up from forecasts at 0.3%; year/year core expected +3.7%, increased to 3.8%. The reaction was swift and deep, the 10 year note increased 13 bps to 4.50%. The point is inflation data has a recent history of not meeting forecasts.
10 year note: 4.48% -2 bp
5 year note: 4.49% -3 bp
2 year note: 4.84% -3 bp
30 year bond: 4.62% -2 bp
30 year FNMA 6.0: @9:30 am 100.23 +14 bp (+8 bp from 9:30 am Friday)
30 year FNMA 6.5: @9:30 am 101.67 +11 bp (+7 bp from 9:30 am Friday)
30 year GNMA 5.5: @9:30 am 99.30 +18 bp (+16 bp from 9:30 am Friday)
Dollar/Yuan: $7.2334 +$0.0065
Dollar/Yen: 155.78 +0.03 yen
Dollar/Euro: $1.0801 +$0.0029
Dollar Index: 105.06 -0.24
Gold: $2,353.70 -$21.30
Bitcoin: 62,688 +1302
Crude Oil: $79.13 +$0.87
DJIA: 39,615 +102
NASDAQ: 16,378 +37
S&P 500: 5230 +7
Yesterday rates got a boost on weekly jobless claims hitting a nine-month high and the 30 year bond auction met with strong demand. The 10 year note -4 bps, MBS prices +18 bps. This morning the 10 at 9 am +3 bps and MBS prices -15 bps. This week the economic calendar was almost non-existent, weekly claims yesterday and this morning the University of Michigan consumer sentiment report at 10 am ET.
The economy, based on a couple of recent reports, is slowing. Both the Conference Board’s consumer confidence index and the final April University of Michigan sentiment index showed a marked decline in consumers’ thinking. A little more than anecdotal but neither have inflation reports. That comes next Tuesday and Wednesday when April PPI (Tuesday) and CPI (Wednesday). Next week’s calendar has a lot of key data after this week’s lack of news and treasuries trading in narrow ranges.
At 9:30 am the DJIA opened +95, NASDAQ +34, S&P +13. 10 year at 9:30 am 4.49% +3 bps. FNMA 6.0 30 year coupon -13 bps from yesterday’s close and +13 bps from 9:30 am yesterday; the 6.5 coupon -9 bps from yesterday’s close and+9 bps from 9:30 am yesterday.
At 10 am the University of Michigan consumer sentiment index thought to be at 77.0 from 77.2 two weeks ago, the index dropped to 67.4. More evidence that consumers are getting edgy.
This afternoon at 2 pm Treasury will report the April deficit, expected at -$236.0B unchanged from March.
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10 year note: 4.49% +3 bp
5 year note: 4.50% +2 bp
2 year note: 4.85% +2 bp
30 year bond: 4.63% +3 bp
30 year FNMA 6.0: @9:30 am 100.15 -13 bp (+13 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.60 -9 bp (+9 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.14 -10 bp (+15 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2255 +$0.0056
Dollar/Yen: 155.67 +0.19 yen
Dollar/Euro: $1.0788 +$0.0005
Dollar Index: 105.23 +0.01
Gold: $2,372.20 +$31.40
Bitcoin: 62,982 +526
Crude Oil: $79.80 +$0.54
DJIA: 39,530 +142
NASDAQ: 16,391 +45
S&P 500: 5231 +17
Weekly jobless claims this morning were the highest since last August at 231K, expected at 212K, claims increased to 231K +22K from the prior week and for the first time in nine weeks claims moved from the narrow range that had kept claims in a very narrow range. The number of people already collecting jobless benefits (continuing claims) in the week ended April 27 rose by 17,000 to 1.79 million. The labor market is slowing as Powell commented last week. Prior to the 8:30 am ET release the 10 year note traded +2 bps at 4.52% after the note increased 4 bps yesterday. The initial reaction took the 10 from 4.52% to 4.49% -1 bps, MBS prices +3 bps from yesterday’s close. Two-year yields, which are more sensitive to imminent Fed moves, dropped three basis points to 4.8%, stock indexes in futures trading prior to the data were weaker.
This week has a few officials commenting that rates are likely to stay higher than what had been expected. All said the Fed would not be lowering rates anytime soon. Today’s weekly claims offers some hope but won’t change the Fed’s goal of 2.0% inflation. Next Tuesday and Wednesday we will get April PPI and CPI inflation data, likely won’t see much movement or changed outlooks until markets see that data.
The Bank of England met today and left interest rates unchanged as expected, unlike in the U.S., the inflation rate is still falling giving the BOE some latitude. Two of the nine people on the Monetary Policy Committee voted to lower rates at this meeting. For the Fed, the market is pricing in a first cut around September, according to the CME FedWatch tool.
At 9:30 am the DJIA opened -44 bp, NASDAQ +23, S&P +2. 10 year note 4.51% +2 bps. FNMA 6.0 30 year coupon at 9:30 am -3 bps from yesterday’s close and -7 bps from 9:30 am yesterday.
At 1 pm Treasury will auction $25B of new 30s, yesterday’s 10 year auction was somewhat disappointing when at the auction the yield was 1 bp higher than in WI trading prior to the auction.
10 year note: 4.51% +2 bp
5 year note: 4.51% unch
2 year note: 4.83% -1 bp
30 year bond: 4.67% +2 bp
30 year FNMA 6.0: @9:30 am 100.02 -3 bp (-7 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.51 -2 bp (-6 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 98.99 -3 bp (-3 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2241 -$0.0009
Dollar/Yen: 155.66 +0.13 yen
Dollar/Euro: $1.0765 +$0.0015
Dollar Index: 105.43 -0.12
Gold: $2,325.80 +$3.50
Bitcoin: 61,152 -1010
Crude Oil: $79.13 +$0.14
DJIA: 39,141 +84
NASDAQ: 16,292 -11
S&P 500: 5192 +4
Rates began the session slightly higher, the 10 year note at 4.48% +2 bps at 8:30 am ET, MBS prices -7 bps.
Weekly MBA mortgage applications improved last week, applications rose by 2.6% from the prior week in the period ending May 3rd, recovering from a 2.3% decline and stopping two consecutive weeks of declines, according to data from the MBA. Applications for mortgages to purchase a new home rose by 1.8%, while those to refinance a home jumped by 4.5%.
At 9:30 am the DJIA opened -15, NASDAQ -99, S&P -20. 10 year at 9:30 am 4.49% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -10 bps from yesterday’s close and -11 bps from 9:30 am yesterday.
This afternoon at 1 pm Treasury will sell $42B of new 10 year notes, the demand will be important. Yesterday the 3 year note auction went OK but today’s 10 year auction could move markets if investors step in and aggressively bid it, conversely if demand is weak mortgage rates could see selling with the 10-yield increasing.
There are just two more data points of substance the rest of the week, tomorrow weekly jobless claims (212K from 208K), and Friday the University of Michigan’s consumer sentiment index (77.0 from 77.2), year/year inflation forecast +3.2% unchanged from April. Next Tuesday and Wednesday inflation data, April PPI on Tuesday, and April CPI on Wednesday.
Yesterday’s low yield on the 10 was 4.42% where it reversed at the 40-day MA to close at 4.46% -3 bps. Any movement on the 10 year note depends on how well the $42B 10 year note auction is received.
2 year note: 4.84% unch
30 year FNMA 6.0: @9:30 am 100.09 -10 bp (-11 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.57 -10 bp (-2 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.05 -14 bp (-19 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2282 +$0.0088
Dollar/Yen: 155.61 +0.92 yen
Dollar/Euro: $1.0754 -$0.0002
Dollar Index: 105.52 +0.10
Gold: $2,317.00 -$7.20
Bitcoin: 62,110 -929
Crude Oil: $77.60 -$0.78
DJIA: 38,886 +2
NASDAQ: 16,284 -48
S&P 500: 5180 -8
Rates began generally unchanged this morning. Yesterday the yield curve was flat with nothing to feed from. Today the same, the only things today, at 1 pm ET Treasury will sell $58B of 3 year notes and at 3 pm March consumer credit, neither will have much impact on rates.
At 9:30 am the DJIA opened +21, NASDAQ +10, S&P +8. 10 year at 9:30 am 4.45% -4 bps. MBS 6.0 30 year coupon at 9:30 am +16 bps from yesterday’s close and +7 bps from 9:30 am yesterday.
Nothing now until 1 pm the $58B 3 year note auction, and then at 3 pm March consumer credit.
Looking for another quiet session with no news of consequence. Rate cuts, no rate cuts, still a toss up but after employment, weak consumer sentiment and confidence, the idea the economy may be slowing gave a boost to rate cuts later this year. The problem, every key data point changes traders views.
10 year note: 4.45% -4 bp
5 year note: 4.46% -4 bp
2 year note: 4.82% -1 bp
30 year bond: 4.59% -5 bp
30 year FNMA 6.0: @9:30 am 100.20 +16 bp (+7 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.59 +11 b p (-4 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.24 +23 bp (+7 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2188 +$0.0046
Dollar/Yen: 54.39 +0.47 yen
Dollar/Euro: $1.00782 +$0.0014
Dollar Index: 105.06 +0.01
Gold: $2,327.30 -$3.90
Bitcoin: 63,371 +179
Crude Oil: $77.99 -$0.51
DJIA: 38,982 +76
NASDAQ: 16,339 -10
S&P 500: 5187 +7