Weekly Mortgage Overview: 10/4/2021

By October 4, 2021Mortgage Overview

What Happened Last Week?

Week Started with Drama, Ended Uneventful

Monday and Tuesday suggested the previous week’s ride wasn’t yet over. Against that unpleasant backdrop, the last 3 days of the week were completely unfamiliar–especially Friday. The trading range was the narrowest of the week. The gains were by far the most linear (very little back-and-forth volatility throughout the day). Analysts in high flying aircraft might look at the day as some sort of response to tame inflation data, but that’s not the story here (if data mattered today, stronger ISM numbers would have done more to push back in the other direction). As it stands, the steady drift toward lower yields is more suggestive of the shuffling of trading positions at the start of a new month. Gains would be more meaningful if they stick around this week.

Source: Matthew Graham, Mortgage News Daily 10/1/21

What’s on the Agenda for this Week?

Three Things

The three areas that have the greatest ability to impact mortgage backed securities backend pricing this week are: (1) Jobs, Jobs, Jobs, (2) Geopolitical and (3) Central Bank Palooza.

(1) Jobs, Jobs, Jobs: There will be a ton of headline jobs/wage related data this week and a lot of related data buried within reports like ISM as well. This will all culminate in Big Jobs Friday. The markets will be keen to see the juxtaposition of approximately 7 million people falling off of the various CARES/Covid checks for a portion of September vs. those who elected/chose to go back to work in September.

(2) Geopolitical: The main focus is on the Debt Ceiling as that will hit sometime close to October 18th. There are two main pushes to get around that: one is just a bill being pushed that would suspend the debt ceiling, the other is through the whole reconciliation process that has gone amuck over the $3.5T non-infrastructure bill.

(3) Central Bank Palooza: There are key interest rate decisions from New Zealand and Australia but the focus will be on our talking Feds Montgomery (took over for Rosengren), Bullard, Quarles, Barkin, Bostic and Mester.

Market Wrap-up

Domestic Flavor

Manufacturing: August Factory Orders increased by 1.2% which was higher than market expectations of 0.9%.

On Deck for Tomorrow: ISM Services, Markit Services PMI, Economic Optimism.