Weekly Mortgage Overview: 4/10/2023

By April 10, 2023Mortgage Overview

What Happened Last Week?

Rates Bounce After Hitting 2 Month Lows

The first week of any given month often brings several of the most meaningful monthly economic releases. These include reports from the Institute for Supply Management (ISM) and most notably, the Employment Situation (more commonly referred to as “the jobs report”). Virtually all of the economic data that came out in the first 3 days of April were good for bonds/rates. In other words, the data was weaker than expected. Bonds benefit from weak data because a slower economy is less capable of sustaining growth and inflation–two of the main pillars of interest rates.
Source: Matthew Graham, Mortgage News Daily 4/7/23)

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) Central Bank Palooza and (3) Geopolitical.

(1) Inflation Nation: The biggest economic release of the week is Tuesday’s CPI data which is expected to show an additional MOM gain. The spread of that gain will have a big impact on pricing. PPI will also be on Wednesday which is expected to weaken. There will also be some inflationary data in Import/Export data and UofM Consumer Sentiment.

(2) Central Bank Palooza: The Bank of Canada will issue a key interest rate decision which had been “paused” at their prior meeting. The IMF is also a main focus as this week they have their annual meetings this week. Our own Federal Reserve will release the minutes from their last FOMC meeting on Wednesday and there will be several Talking Feds.

(3) Geopolitical: The bond market is very much focused on the heightened military stress with China/Taiwan as well as continued concern over Ukraine/Russia et al. The dollar is front and center as it is being diminished as the global currency as China/Iran/Brazil, etc., all have inked deals to trade in their own currencies, bypassing the U.S. dollar.

Treasury Dump

There is a very important 30-year bond auction on Thursday.

  • 04/11: 3-year note
  • 04/12: 10-year note
  • 04/13: 30-year bond

Market Wrap-up

The Fed

In the New York Fed’s March Survey of Consumer Expectations, inflation expectations are on the rise once again. This is especially in the short-term as the median inflation expectations increased by a half percentage point at the one-year-ahead timeframe to 4.7%, the first increase in the series since October 2022. Median inflation expectations for the three-year-ahead horizon edged up 0.1% to 2.8%.

Treasury Dump

On deck for tomorrow is the 3-year Treasury note auction.