Published Date 6/12/2024
The improvement in rates began yesterday on the very strong 10 year note auction that implied markets were tilting hard for better inflation data this morning on the release of May CPI. CPI didn’t disappoint, the expectations were CPI would be unchanged from April, inflation declined sending rates lower and MBS prices higher. The initial reaction at 8:30 am ET sent the 10 year note down to where it traded prior to the run up in rates due to the May employment report last Friday, -11 bps and MBS prices +40 bps.
CPI month/month expected +0.1% from +0.3% in April declined to unchanged, year/year thought to be +3.4% the same as April hit at 3.3%. The core, excluding food and energy, forecast month/month was +0.3% unchanged from April dropped to +0.2%, year/year estimates +3.5% reported at +3.4% and down from 3.6% in April. Inflation instead of being essentially unchanged from April fell, good news for the markets, rates, and the Fed.
The reaction generated a buzz that the Fed may be able to lower rates two times this year, but it still depends on whether the decline in inflation in May is the start of a trend. The FOMC policy statement and Powell’s press conference this afternoon won’t likely provide additional clarity from what we have heard from the Fed in past FOMC meetings. Along with the policy statement markets will get the Fed’s quarterly forecasts on employment, inflation, and GDP outlooks. Will the Fed cut rates with inflation based on today’s report still 1.4% above the Fed’s target? The ECB last week cut its rate with inflation above the same 2.0% target.
The decline in rates started yesterday with a very strong response for the $39B 10 year note auction, the strongest demand since 2022. Rates globally declined yesterday partly on the potential of turmoil in France over who will continue to lead the country. Friday’s employment data, way off the charts in terms of job growth still lurks, the increases in jobs doesn’t equate to other job measurements, job openings declining not increasing.
At 9:30 am the DJIA opened +333 on better CPI, NASDAQ +164, S&P +49. 10 year note at 9:30 am 4.29% -12 bps; FNMA 6.0 30 year coupon at 9:30 am +41 bps from yesterday’s close and +57 bps from 9:30 am yesterday.
Financial markets will trade in narrow ranges until this afternoon’s FOMC statement, Powell’s press conference and the Fed’s quarterly forecasts.
The 10 year note trading at its level prior to the May flawed employment data, need some favorable remarks from Powell this afternoon to see the 10 decline more.
Source: TBWS
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.
Superior Funding Corporation is a Massachusetts Mortgage Company. Massachusetts Mortgage Lender and Broker License: MC2972, NMLS ID: 2972.
NMLS: 11481
Superior Funding Corporation
343 Washington Street, Newton MA
Company NMLS: 2972
Office: 617-938-3900
Email: rshulman@sfcorp.net
Web: http://sfcorp.net
NMLS: 11481
9/25/2024
At 8:30 am ET this morning the 10 year note at 3.76% +3 bp, MBS prices down...... view more
9/23/2024
In a remarkable turn of events, the US housing market has witnessed a dramatic i... view more
9/18/2024
This afternoon is the widely anticipated FOMC rate cut. It will be the first cut... view more
9/16/2024
As the real estate market continues to challenge buyers with high prices and hef... view more
9/11/2024
August CPI about as expected; month/month +0.2% unch from July, year/year +2.5% ... view more
9/9/2024
As the summer housing market winds down, a new landscape is emerging for both bu... view more
9/4/2024
The 10 year note fell 8 bps, the 2 year note -6 bps; MBS prices gained...... view more
8/28/2024
Today started unchanged in markets, yesterday also essentially unchanged. The fo... view more
8/26/2024
The U.S. housing market has been on a wild ride in 2024...... view more
8/21/2024
The key data today is the revision from the BLS of job growth...... view more