Published Date 5/13/2022

The pattern remains the same as the last week, stocks better, interest rates higher. The recent heavy selling of equities has pushed safety moves to treasuries, yesterday the 10 yr. note yield fell 8 bps to 2.82% as stock indexes and fears mounted, MBS prices increased 26 bps. This morning stock indexes began higher, the 10 yield at 9 am ET 2.92% +10 bps and MBS started down 20 bps from yesterday’s close.

April import and export prices released at 8:30 am were both less than forecasts. Import prices expected +0.6% were unchanged, yr./yr. expectations +12.0% on thoughts of 12.9%. Export prices estimates +1.0% increased just 0.6%, yr./yr. +18.0% on forecasts of 19.2%. It is another report that implies price increase have moderated, just like CPI and PPI the last two sessions. Inflation remains at decade highs after the huge increases late last year and early this year. Central banks continue to drive home the point that interest rates will continue to increase, the Fed, ECB, BOE, and most others continue to remind that rates are going higher to drive a spike in inflation’s heart.

At 9:30 am the DJIA opened +252, NASDAQ +184, S&P +42. 10 yr. 2.91% +9 bp.

At 10 am FNMA 4.5 30 yr. coupon -39 bps and -36 bp from 10 am yesterday.

At 10 am the mid-month U. of Michigan consumer sentiment index expected at 63.7 from 65.2 in April, the index fell to 59.1 implying consumers are losing confidence in the outlook.

Already today the level of volatility in the treasury and MBS markets continues to roil markets. The 10 moving three basis points at a time, MBSs also swinging in wide changes.

Source: TBWS

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