October 2, 2023 – Rate Commentary

• October 2, 2023
• realestatelife
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

Rate sheets will be much worse than Friday AM, as bonds continue to fall after a short lived mini rally. Reprice risk on the day is moderate, despite an already weak start we could see bonds continue to worsen which would put lenders in a position to reprice worse. Although it could be argued that some weakness in the labor data this week could help stem the bleeding, the reality is that there is no reason to see rates drop significantly from here and we will instead likely see them creep higher.

The government shutdown was averted, although it was done with the usual tomfoolery from Congress. Our representatives kicked the can down the road for 45 days in a last minute deal that was signed hours before the deadline (despite NY Rep. Jamaal Bowman pulling the fire alarm… no, this is not me joking). You could blame the deal on some of this morning’s bond losses, except for the fact that we had been seeing bonds tank hard Friday despite the upcoming shutdown… so that doesn’t really jive.

Lock all the loans. We are likely to see rates jump up and down a bit, with some market reaction to the JOLTS data tomorrow and then the big jobs data on Friday… but we aren’t going to see rates move lower from here. Let’s go cliche, and call this “our new normal”.

Technicals:

The UMBS 6.0 coupon is at 98.30, -33bps on the day.

The 10yr Treasury yield at 4.67.