Weekly Mortgage Overview: 10/23/2023

By October 23, 2023Mortgage Overview

What Happened Last Week?

Doom, Gloom, Kool Aid, and Warm Porridge

Mortgage rates finally broke the 8% ceiling last week after months of gradual upward movement in the 7% range. At the same time, Existing Home Sales fell to the lowest levels in more than a decade. Pretty gloomy… but there are silver linings and perhaps even some overly optimistic Kool Aid to drink. As always, experts try to focus on the warm bowl of porridge in the middle.
Source: Matthew Graham, Mortgage News Daily 10/20/2023)

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) Inflation Nation, (2) GDP and (3) Central Bank Palooza.

(1) Inflation Nation: THE key measure of inflation, Core PCE will be issued on Friday. The Core reading is expected to rise at a pace three times higher than the prior month (0.3% versus last of 0.1%). Personal Incomes and Personal Spendings (savings rate) will also be part of the release.

(2) GDP: First look at the 3rd quarter GDP is this week. It is expected to shoot up from 2.1% in the 2nd quarter to 4.1% in the third. Long bonds are very sensitive to GDP above 3%.

(3) Central Bank Palooza: Key interest rate and policy decisions will be issued from the Bank of Canada and the European Central Bank.

Treasury Dump

Even more debt will be added to the market place this week:

  • 10/24: 2-year note
  • 10/25: 5-year note
  • 10/26: 7-year note

Market Wrap-up

Overview

There were no events today.

On Deck for Tomorrow

Richmond Fed Manufacturing and 2 year Treasury note auction.