Weekly Mortgage Overview: 9/7/2021

By September 7, 2021Mortgage Overview

What’s Happening Today?

U.S. Stocks Drop Amid Concern Recovery Has Peaked

U.S. stocks slipped from near records with traders returning from the long weekend to worries that the economic recovery is faltering. The S&P 500 and Dow Jones Industrial Average declined, while gains in big tech stocks, including Netflix Inc., Amazon.com Inc. and Apple Inc., pushed the Nasdaq 100 higher. European markets slipped as investors speculated that euro-zone policy makers may get ready to roll back stimulus. The greenback was higher for a second day amid rising bond yields and softer commodity prices. Bitcoin plunged as El Salvador became the first country to adopt it as legal tender Tuesday. (Continue reading…)

What’s on the Agenda for this Week?

Three Things

The three areas that have the greatest ability to impact MBS pricing this week are: (1) Central Bank Palooza, (2) The Talking Fed and (3) Inflation Nation.

(1) Central Bank Palooza: There will be a very important European Central Bank Interest Rate Decision. While the markets are not expecting a change in their rate, they are concerned (based upon recent speeches) that the ECB tone may turn a little more “hawkish” particularly in relation to their asset purchase program. The Bank of Canada will also have their Interest Rate and Policy Statement.

(2) The Talking Fed: The Fed’s Beige Book will be issued on Friday which is prepared specifically in advance of the September FOMC meeting. The market will be looking for employment and inflation comments from the 12 districts.

(3) Inflation Nation: Friday’s Producer Price Index will get the lion’s-share of attention as far as economic releases as it is a forward-looking inflationary indicator.

Treasury Dump: Here is this week’s Treasury Auction schedule.

09/07: 3-year note
09/08: 10-year note
09/08: 30-year bond

Market Wrap-up

Domestic Flavor

Treasury Dump: Three days of dumping debt into the marketplace kicked off with the shorter-term 3-year note. $58B went off at a high yield of 0.447%. The bid-to-cover ratio was 22.45.

On Deck for Tomorrow: JOLTS, Bank of Canada Interest Rate Decision, 10 year Treasury note auction.