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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
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Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Rate sheets this morning will be much better, reflecting yesterday’s strong showing for bonds. Reprice risk on the day today is low, it SHOULD be a quiet day ahead of the weekend… but of course nothing is guaranteed these days. Generally things should settle down heading into next week ahead of the Fed meeting, and then we’ll have to sort everything out on Wednesday.
Bonds shrugged off this morning’s PCE inflation data, despite it showing inflation accelerating to a four-month high in September when consumer spending picked up. The Fed’s messaging has been pretty firm, and traders don’t see this report changing the course. Expectations of a Fed rate hike next week are less than zero, and probability of a December hike keeps falling.
Next week will be interesting for sure, mainly when markets react after Fed Chair Jerome Powell’s press conference. Bonds have been extremely volatile recently, and I still think there is a good chance we see the 10yr break up through 5%… but it is not a given yet. Depending on how things go after the Fed meeting, we could see rates settle in, or we could see them get angry and jump up a bit.
Loans closing in less than 15 days that are not locked must have a reason… so continuing to cautiously float makes sense. Rates are not likely to move significantly lower from here unless we see some kind of very positive reaction to Wednesday’s Fed fireworks. Although we could wake up to anything on Monday (sure feels that way at least) it makes sense to hold out and see what next week brings.
Loans closing in 15-30 days should cautiously float, and let’s see what next week’s Fed meeting brings our way. I’d love to set your mind at ease and tell you that things are looking good, but we really just don’t know. The last few Fed meetings have not been good for rates, will this one be?
Loans closing in 30+ days should cautiously float. These loans have the most time to live through the ups and downs, but we really don’t know where rates will be in a couple of weeks.
Technicals:
The UMBS 6.5 coupon is at 99.11, and although that is down -13bps on the day it is still up about +20ish bps from when pricing came out yesterday, so rate sheets should be better. We’ve seen some really big swings in mortgage bonds this week, day after day. Hopefully today caps the week with a quiet showing.
The 10yr Treasury yield at 4.86, and it is likely we see it stay below 5% until at least Wednesday’s Fed meeting.
