Weekly Mortgage Overview: 6/20/2023

What Happened Last Week?

June’s Theme Continues: Sideways and Choppy at Weaker Levels

Heading into last week’s CPI and Fed Day combo, experts expected bonds to be broadly sideways with elevated volatility. But rather than give new direction, the week’s big ticket events only perpetuated the sideways-ness and increased the volatility. Even the non-big-ticket events had a say. Thursday’s Jobless Claims was as big a market mover as anything. On Friday, a few Fed speakers and the Consumer Sentiment data added ups and downs for yields (mostly ups).
Source: Matthew Graham, Mortgage News Daily 6/16/2023)

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) The Talking Fed, (2) Central Bank Palooza and (3) Treasury Dump.

(1) The Talking Fed: Now that the FOMC meeting is concluded, there will be a ton of Fed speeches this week with a focus on Fed Chair Powell, who will speak twice.

  • 06/20: Bullard, Williams
  • 06/21: Powell, Cook, Jefferson, Goolsbee and Mester
  • 06/22: Powell, Mester

(2) Central Bank Palooza: There will be key interest rate decisions out of Switzerland and Great Britain. The Bank of England is expected to hike but the market is expecting a “dovish” hike.

(3) Treasury Dump: There is an important 20-year bond auction on Wednesday.

Market Wrap-up

Taking it to the House

May Building Permits were higher than expected as the annualized number hit 1.491M vs. estimates of 1.423M and a small gain from April’s pace of 1.417M. Housing Starts were a big surprise to the upside, hitting 1.631M vs. estimates of 1.400M and a big surge from April’s pace of 1.340M.

On Deck for Tomorrow

Fed Chair Powell, Weekly Mortgage Applications and a 20-year Treasury bond auction.