Weekly Mortgage Overview: 10/7/2024

By October 7, 2024Mortgage Overview

What Happened Last Week?

Who Lied About Jobs Numbers?

Unpleasant day for the bond market with jobs crushing forecasts and being revised higher for the past 2 months. We knew it would be high stakes and the magnitude of the reaction makes good sense relative to the data. But how do we reconcile this against the weaker jobs numbers in the past 2 months? And what about reports of a record number of government jobs? As is often the case, there are nuances. The takeaway is that Federal gov jobs were basically flat (adding 1k payrolls whereas state/local gov added 29k payrolls). For context, the biggest categories in health care and food service each added more than 70k jobs.
Source: Matthew Graham, Mortgage News Daily 10/4/2024)

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) Inflation Nation, (2) The Talking Fed and (3) Texas Tea, Black Gold.

(1) Inflation Nation: Several key economic releases are this week with the markets focused squarely on Thursday’s Consumer Price Index followed by Friday’s PPI. The higher these levels are, the worse it will be for pricing and vice versa.

(2) The Talking Fed: The Minutes from the last FOMC meeting will be issued on Wednesday. This will be of major interest to the bond market as they will want to know if the discussion was leaning more towards a 25BPS cut than the one dissenting vote indicated. There will also be many Talking Feds this week:

  • 10/07: Kashkari, Bostic and Musalem
  • 10/08: Bostic and Collins
  • 10/09: FOMC Minutes, Bostic, Logan, Goolsbee, Collins and Daly
  • 10/10: Barkin, Williams
  • 11/11: Goolsbee, Logan and Bowman

(3) Texas Tea, Black Gold: Oil has been on a tear the past 5 trading sessions and it has been putting pressure on bonds. This morning (so far) it is up again due to geopolitical concerns.

Treasury Dump

Here is this week’s Treasury auction schedule, Thursday’s 30Y Treasury bond auction is the most important:

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

Market Wrap-up

Consumer Credit: August Consumer Credit was much weaker than expected with $8.93B versus estimates of $12B and a steep drop from July’s pace of $25.45B.

Texas Tea, Black Gold: WTI Oil shot up 3.99% and Brent is up 3.96%.

On Deck for Tomorrow: Trade Balance and 3-year Treasury note auction.