Weekly Mortgage Overview: 3/18/2024

By March 18, 2024Mortgage Overview

What Happened Last Week?

Quiet Conclusion to a Raucous Week

For a short while Friday morning, it looked as if bonds would break up and over the recent 4.32+ ceiling in 10-year yields, but trading calmed down and trended sideways in a narrow range for the rest of the day. It was a calm conclusion to what has otherwise been the most damaging week since October. But don’t let the calm fool you. It’s likely to be calm before the storm considering next week brings a new Fed dot plot for the first time since December 13th.
Source: Matthew Graham, Mortgage News Daily 3/15/2024)

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: On Wednesday will be the latest FOMC Interest Rate Decision and Policy Statement. While there are no expectations of any rate changes at this meeting, the bond market will be very sensitive to changes in the policy statement as well as mentions of changes to the QT wind down process. But of more importance is the release of their updated Economic Projections from which the famous “dot plot” chart is created. The bond market will focus on the groupings of “dots” that move away from rate cuts/lower expected rates during certain periods compared to their last release. After all of that, there will be a live presser with Fed Chair Powell.

(2) Central Bank Palooza: Our Federal Reserve is not the only game in town this week. There will also be key interest rate decisions from the Bank of England, the Reserve Bank of Australia and the Bank of Japan. The BofJ may actually raise their interest rate for the first time in forever from -0.10% to 0.0%.

(3) Treasury Dump: There is an important 20-year Treasury bond auction on Wednesday at 1 pm ET.

Market Wrap-up

Domestic Flavor

Taking it to the House: The March National Association Home Builder’s Sentiment Index popped back above 50 for the first time in months, coming in at 51 versus estimates of 48.

On Deck for Tomorrow

The Bank of Japan Interest Rate Decision, Reserve Bank of Australia Interest Rate Decision; FOMC starts two days of meetings; Housing Starts and Building Permits.