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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
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UMBS 6.0: 97.84 (+37bps)
10yr yield: 4.74
Alls well that ends well? Some late day repricing better, however, still nothing to get too excited about. Rates may drift a little bit lower from here, but it won’t be much, advice remains to lock in, despite potential for possible improvement tomorrow. Tomorrow we get jobless claims numbers, but the big job is on Friday.
Rate sheets today likely to be more in line with where things started yesterday when rates came out, before the many reprices worse. Yesterday was a bad day for rates, with some lenders repricing worse more than once as bonds plummeted on the day. The strong JOLTS data was a big driver, as I warned could happen. This morning’s ADP private payroll was more rate friendly, showing companies added the fewest number of jobs since the start of 2021 in September and pay growth slowed, pointing to a weakening in labor demand in several industries. I still wouldn’t say that it is a good idea to float into Friday’s non farm payroll and unemployment data, but if it also comes in showing some softening in the labor market it will help pricing a bit. We could see bonds move on today’s ISM non-manufacturing data at 10am ET, which comes out just as most lenders start setting pricing.
Nothing significant has changed in the outlook… risks still favor locking. Even if we get any kind of underperformance in labor data this week, we will only see a blip of improvement. Rates are likely to be higher in a month than what we see today, but hopefully not much higher.
Technicals:
The UMBS 6.0 coupon is at 97.64, +17bps on the day but still down about -25bps from yesterday’s commentary.
The 10yr Treasury yield at 4.75, although it was as high as 4.80 already. I still think that although it may take awhile, it is no longer absurd to think about a 10yr yield in the 5’s.
