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MORTGAGE APPLICATIONS TICK HIGHER

Interest rates began unchanged this morning, holding nicely while the stock market continues to be pressured—no direct market data today. Weekly MBA mortgage applications last week were +1.2% Purchases declined 4.0% from the prior week. Refinance apps, where we expect lower apps with interest rates holding at these recent highs levels, increased 4.0%. Would-be buyers are finding little inventory that continues to lessen.

Equity markets continue to ramp up inflation outlooks, which have increased in the minds of investors. Meanwhile, interest rates after spiking earlier this year have not budged for two months. Rate markets adjusted that inflation would increase well before equity markets took up the mantra over the last two weeks. The long end of the curve isn’t increasing its inflation expectations while equities have taken recent notice. Not just inflation, stock investors also taking the coming tax increases more seriously. Based on the key indexes, that market has been overly optimistic and technically overbought for weeks.

Cryptocurrency mania has hit the skids; the bubble added billions to digital tokens overnight is bursting. Prices for the Bitcoin digital asset dropped 12% to about $38,000 as of 7:38 am ET this morning. It’s now down around 40% from its record of almost $65,000 set in April. Other crypto tokens dropped in tandem, with Ether losing more than 20%. China’s Peoples Bank yesterday reiterating that digital tokens can’t be used as a form of payment added to the selloff. Technicals on Bitcoin are bearish, a head and shoulders formation and presently down to its 200-day average. All gains erased that ensued when Elon Musk stepped in for a couple of months before he stepped out last week.

At 9:30 am ET, the DJIA opened -365 after -267 yesterday, NASDAQ opened -75, S&P -35. 10 yr at 9:30 am unchanged at 1.64%. FNMA 2.5 30 yr coupon at 9:30 am -6 bps from yesterday’s close, and +3 bps from 9:30 am yesterday.

At 1:00 pm ET, Treasury will auction $27 pf 20 yr bonds.

At 2:00 pm ET, the release of the minutes from the April FOMC minutes.

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