Weekly Mortgage Overview: 2/7/2022

By February 7, 2022Mortgage Overview

What Happened Last Week?

Aren’t Bonds Overreacting to a Jobs Report that Wasn’t Supposed to Matter?

The Fed already declared victory on the “full employment” portion of their mandate and justified recent hawkishness as a function of inflation concerns. The analytical community was crowded with opinions about Friday’s jobs report not being a market mover due to any new information on the labor market. After all, Omicron was destined to distort the numbers anyway, so why should anyone care? Turns out they did care…a lot!
Continue reading: Matthew Graham, Mortgage News Daily 2/4/22)

What’s on the Agenda for this Week?

Three Things

The three areas that have the greatest ability to impact MBS backend pricing this week are. (1) Inflation Nation, (2) The Talking Fed and (3) Treasury Dump.

(1) Inflation Nation: There will be a big report on Thursday with the Consumer Price Index. After Friday’s big jobs beat, a hot CPI report will put extra pressure on pricing. The consensus estimates call for the headline YOY CPI to rise from 7.0% to 7.2% and Core CPI YOY to rise from 5.5% to 5.9%. None of those readings would be good for MBS pricing.

(2) The Talking Fed: As the market continues to hedge for either a 1/4 or a 1/2 point rate hike next month, experts will be very focused on any Fed-Speak as it pertains to rates and the timing of their QT.

(3) Treasury Dump: Here is this week’s schedule:

02/08: 3-year note
02/09: 10-year note
02/10: 30-year bond

Market Wrap-up

Domestic Flavor

Consumer Credit: The December data was a big dip from November’s reading…dropping from $39.99B down to $18.9B. Estimates were for $20.9B.

Inflation Nation: Tyson Foods reported that in the 3rd quarter beef prices jumped by 32%, with chicken up ~20% and pork 13%.

On Deck for Tomorrow: 3-year note auction, NFIB Small Business Optimism, Trade Balance.