April 24, 2023 – Economic News

• April 24, 2023
• realestatelife
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

MBS OVERVIEW

Three Things: These are the three areas that have the greatest ability to impact your backend pricing this week. 1) LLPA, 2) Inflation Nation and 3) GDP

1) LLPA: Loan Level Pricing Adjustments are now a form of social engineering and will have a big impact on how mortgage rates are calculated, Bryan discusses in great detail in today’s video.

2) Inflation Nation: The Fed is now in their Media Blackout Period as we await their May Interest Rate Decision and Policy Statement. This week’s Core PCE MOM reading will be a huge factor in their decision.

3) GDP: We get the first look at the first QTR GDP and it will be a big focus for traders.

The 10 year note began today down 4 bps at 3.53% after testing its upside support at 3.60% on Friday (close 3.58%); MBS prices generally unchanged.

There are no economic reports today, no Fed speakers this week. The key data doesn’t hit until Friday when the March PCE inflation data is reported (the Fed’s fave). The report comes three days prior to the FOMC meeting on May 3rd.

Bloomberg reporting this morning that highly leveraged hedge funds are betting on higher Treasury yields in a market that’s divided over whether the US economy can avoid recession and Federal Reserve interest-rate cuts. Next Wednesday the FOMC is expected to increase the FF rate by 25 bps then pause, possibly through the end of the year. The funds increased short positions to 1.29 million contracts as of April 18th. (data from the CFTC). It was the fifth straight week that net shorts had increased. The swap markets continue to bet 100% that the Fed will increase next week, that assumption is already being discounted in market levels. Then there is that constant other side, wagering on recession and the Fed back-peddling. Over the last six weeks the bellwether 10 year note has traded flat, in a 20 bp range from 3.405 to 3.60%. The 10-year Treasury yield has advanced six basis points this month to 3.53%, unwinding some of March’s 45-basis-point drop.

At 9:30 am the DJIA opened +7, NASDAQ -17, S&P unchanged. The 10 year note -4 bps to 3.54% after increasing 4 bps last Friday. FNMA 6.0 30 year coupon +2 bps and -7 bp from 9:30 am Friday.

The US dollar is losing its strength on bets the Fed will launch into an easing cycle later this year. Investors may swing to the Yuan and yen as currencies rotate. Just a thought, but if the dollar weakens as increasing beliefs suggest gold will climb.

Nothing has changed, it’s a coin flip in markets whether the Fed will keep going, pause, or quit increasing rates. It is thought as certain as can be with the Fed, a 25 bp increase next week, already fully discounted in present levels. The key next week is the policy statement and Powell’s press conference. There are some interesting data points this week and Treasury will auction 2s, 5s, and 7s; the key data isn’t until Friday however (see calendar). Earnings season continues to dominate near term equity markets.

Pres. Biden expected to announce his candidacy tomorrow on a video. The House will have debt ceiling package this week, doubt it will gain meaningful traction though; Republicans can afford just 4 defectors. We wonder why there is a debt ceiling at all, at the end of the day whatever outcome occurs, it’s the same every time this comes around and always and forever the US will not default on its debt.

This Week’s Calendar:

• Monday,

No data

• Tuesday,

9 am Feb Case/Shiller home price index (-0.4%, year/year 0.0%)

10 am April consumer confidence index (104.2 unch from March)

March new home sales (635K from 640K)

1 pm 2 year note auction

• Wednesday,

7 am weekly MBA mortgage apps

8:30 am March durable goods orders (+0.9%, ex transportation -0.2%, core +0.2%)

March US trade deficit (-$90.0B)

1 pm 5 year note auction

• Thursday,

8:30 am weekly jobless claims (249K from 245K)

Q1 advance GDP (2.0% from 2.6% in Q4)

10 am March pending home sales (+0.4% from +0.8% in Feb)

1 pm 7 year note auction

• Friday,

8:30 am March personal income +0.2%, personal spending 0.0%)

March PCE m/m +0.1%, year/year +4.2% from 5.0%; core m/m +0.3%, year/year +4.5% from 4.6%)

Q1 employment cost index (+1.0%)

9:45 am April Chicago purchasing mgrs. index (43.5 from 43.8)

10 am final April U. of Michigan consumer sentiment index (63.5 unch from mid-month)