October 23, 2023 – Rate Commentary

• October 23, 2023
• realestatelife
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

WRAP UP
UMBS 6.0: 96.97 (+28bps)
UMBS 6.5: 99.11 (+22bps)
10yr yield 4.85

Surprising late morning rally turned a brutal morning for bonds around, helping rates drop a bit as most lenders repriced better. Current volatility makes it risky to consider floating here, what will happen tomorrow is simply anyone’s guess… and it IS a guess. Lock according to risk tolerance is the only advice I can give today.

Rate sheets will be worse this morning, and reprice risk on the day is moderate. The 10yr Treasury yield passed 5% for the first time in 16 years, although it has fallen back this morning to 4.93. Mortgage bonds not doing as well though, down significantly on the day and giving back all of Friday’s short lived gains. I warned you Friday that we were likely to see this happen, and I’m warning you again that we are likely to see rates move higher from here.

No expectation now that the Fed will raise rates at next week’s meeting, so there is little benefit to be had from a good PCE inflation reading on Friday or any other data for that matter. The momentum is still clearly in the “higher for longer” camp, and that isn’t likely to change this week.

Loans closing in less than 15 days may consider starting the day cautiously floating, but the look to lock by day’s end. It is still more likely we see rates move worse from here.

Loans closing in 15-30 days should consider locking, as rates look ready to move worse rather than improve.

Loans closing in 30+ days should also consider locking, despite the move higher in rates.

Technicals:

The UMBS 6.0 coupon is at 96.47, -22bps on the day.

The 10yr Treasury yield at 4.92, and although falling back below the 5% mark, likely to return there.