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06/04/2023

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06/02/2023

06/02/23 10:04am ET

UMBS 5.5: 99.97 (-20bps)
10yr yield: 3.66
REPRICE RISK: LOW
Jobs data came in showing 339k jobs vs estimates for 195k, which should have sent bonds selling off HUGE, HOWEVER - wages came in softer and unemployment rose to 3.7% which helped. Bonds actually rallied after data to even, but then lost ground again.

06/01/2023

06/01/23

UMBS 5.5: 100.09 (+23bps)
10yr yield: 3.59
REPRICE RISK: MODERATE
Better pricing as bonds rally after early econ data comes in. Jobs data in AM presents risk, so consider locking near term and risk averse closings by days end. However, IF the jobs data tomorrow comes in favorably, it could push rates even lower. Next week not a lot of data and no Fed speakers, could work out in our favor. Let's see how today plays out.

05/31/2023

5/31/2023

Rates should be similar or a bit better than yesterday, as bonds improve a bit further this morning. Reprice risk on the day is low, some choppy trading this morning but now should level out a bit. We do have some Fed speakers and the Fed's Beige Book this afternoon, but that shouldn't cause any big waves. Although this week has set the stage for a nice rebound, we need to be cautious. Without more help on Friday from the jobs report, we aren't likely to see this rally last too long.

Using your credit cards responsibly can actually boost your credit score. Making payments on time and keeping your credi...
05/30/2023

Using your credit cards responsibly can actually boost your credit score. Making payments on time and keeping your credit utilization low are two key factors in building a strong credit history. Try to keep your credit utilization below 30% and pay off your balance in full every month. This will show lenders that you are a responsible borrower and can help increase your credit score over time.

05/26/2023

05/26/23

UMBS 5.5: 98.97 (-14bps)
10yr yield: 3.82
REPRICE RISK: HIGH
PCE inflation data this AM a bust, came in hot (above expectations) and contributing to worse pricing. Markets now putting a Fed rate hike at a 60% probability, after being 99% sure of a pause just a couple of weeks ago, and also pricing in a Fed rate of 5.5 possible in July. Locking loans today.

05/25/2023

UMBS 5.5: 99.23 (-10bps)
10yr yield: 3.77
REPRICE RISK: MODERATE
Bonds having a tough time of it already this morning, with lots of volatility. Markets now pricing in another Fed rate hike sometime over the next two Fed meetings, and aren't seeing a rate cut till Nov or Dec. We will not see rates drop until the sentiment shifts. Debt ceiling - when a deal gets done, it's bad for bonds. Risks still favor locking.

05/23/2023

UMBS 5.5: 99.66 (-19bps)
10yr yield: 3.75
REPRICE RISK: LOW
Rates are continuing to creep higher today, and we aren't going to see them drop until we get another shift in sentiment on the Fed's rate actions (and that will take weeks). No reason to expect big moves today. Certainly not looking for improvement. Locking loans today.

05/22/2023

Rates still slowly creeping higher as the outlook for Fed rate cuts this year grows dimmer, and reprice risk on the day is moderate. There's no economic data today, but we will hear from more Fed members, and markets have been responsive lately to Fed member signals about future rate action. The outlook now very different than it was a couple of weeks ago, back then markets were almost 100% expecting a Fed rate hike pause in June with rate cuts expected in July, despite the Fed stating otherwise. Markets felt the Fed would be forced to act, based on economic data and the banking turmoil. All of that now gone up in smoke, and rates have moved higher out of the range we had enjoyed for almost two months. Although lower rates will come eventually, it will take much longer than was expected. The only good news is that rates are slowly creeping higher, and are not expected to move too much higher from here.

Technicals:

The UMBS 5.5 coupon (MBS or mortgage backed securities) at 99.97, -3bps on the day and still in the worsening trend. The momentum is against us, we could see them fall further before catching any technical support at 99.81.

The 10yr Treasury yield at 3.69, a level not seen since the middle of March. If we don't see a bounce lower, we could see the 10yr push up to the 3.9x's and test 4% again like we did in February.

05/19/2023

5/19/23
WRAP UP
UMBS 5.5: 99.94 (-20bps)
10yr yield: 3.70
Powell signaled that he’s leaning toward a Fed rate hike pause in June to stop and assess how the economy is handling the Feds hikes. Markets moved from pricing in a 40% chance of a rate hike in June to a 20% chance, but bonds not really improving much on the new speculation. Have a great weekend.

05/19/2023

5/19/2023

UMBS 5.5: 99.86 (-28bps)
10yr yield: 3.71
REPRICE RISK: MODERATE
Bonds and rates have broken clear of the range and now at worst levels since mid-March. Momentum continues to build that the Fed will hike in June and that we won't see cuts till later in the year as Fed speakers reinforce the message. Powell spoke today at 11am ET, and with traders being jittery already it could cause bonds to lose ground so stay alert.

05/18/2023

5/18/2023 Rates Update

Rates creeping higher on morning rate sheets today, as markets adjust to expectations of a more hawkish Fed. Reprice risk today is moderate, mortgage bonds are already down on the day but may get worse. It's time to consider protecting some loans because the chances of rates creeping higher is better than rates creeping lower, at least until after Memorial Day. It may prove to be a bit conservative, but this is a big shift in the outlook.

Technicals:

The UMBS 5.5 coupon (MBS or mortgage backed securities) at 100.23, and we could see them fall further as sentiment of another Fed rate hike continues to build.

The 10yr Treasury yield at 3.63, a big jump from the last couple of days, and should be setting off some alarm bells.

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