August 1, 2023 – Rate Commentary

• August 1, 2023
• realestatelife
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

08/01/23 4:47pm ET

WRAP UP
UMBS 5.5: 98.86 (-39bps)

10yr yield: 4.04

No improvement today, leaving the door open for things to get worse. Risks favor locking, little reason to believe that we will see rates move lower. If Friday’s jobs data shows softening to the labor market, we could see rates fall back again… but that’s a lot to bank on. Loans with time could also benefit from next CPI report 8/10, but most loans should consider locking.

Morning

Pricing this morning much worse than yesterday, and reprice risk on the day is moderate. We could see a recurrence of last Thursday, when early weakness snowballed to worse selling and reprices. The outlook not so good for rates, if we don’t see a weak report on Friday with the jobs data we could be looking at rates creeping higher.

For loans closing in less than 15 days, cautiously float to start with an eye on locking. Hopefully we see bonds recover a bit today, although reprices better are not likely. If not looking to gamble into Friday’s jobs data (I don’t know that I would, I’m still torn) consider locking as we do have room for rates to get worse.

For loans closing in 15-30 days, cautiously float. Same as above, pick your spot and take your shot… but consider that we have jobs data August 4th, and CPI data August 10th that could see rates improve (or worsen, more of a possibility for the jobs data). Floating depends on the borrower’s risk tolerance.

For loans closing in 30+ days, cautiously float. It’s just too foggy to know where rates will be in a month, but rates are near the top of the range, and as long as we don’t see a lot of risk of higher rates it makes sense to float and see how some of this data plays out over the next few weeks.

Technicals:

The UMBS 5.5 coupon (MBS or mortgage backed securities) at 98.75, about -50bps and quite worse than yesterday.

The 10yr Treasury yield at 4.04, and we could see it move higher. I’m guessing