Here at the California MBA’s Western Secondary in Orange County, besides talk of Utah’s Pie and Beer Day yesterday, or maybe it is Pioneer Day, most of the discussions are about products (to help borrowers) and lack of premium pricing. And rates. As an indicator, the 10-year Treasury yield ended last week at 2.75 percent and the 2-year closed at 2.97 percent. Meanwhile, the fed funds futures market swung around quite a bit all week, but settled at an 80 percent probability that the Federal Reserve’s policy-making committee lifts the benchmark rate by 0.75 percentage points this week and a close to 20 percent chance of a full percentage point hike. Remember PIGS (Portugal, Italy, Greece, and Spain and their debt crisis from 2009-2014)? Unlike the U.S., which makes up one large jurisdiction, the European Central Bank’s decision to raise its rates will reverberate through 27 different member states and their economies, exposing more indebted countries like Italy to financial trouble and weigh on peripheral bond yields as a whole. Not helping matters was Italian Prime Minister Mario Draghi (a former ECB president) announcing his resignation, prompting Italy’s 10-year government bond yield to jump above 3.5 percent, compared to the just over 1 percent yield on the 10-year German bund. Should Germany pay for other countries? (Today’s podcast is available here and today’s features an Interview with Sara Knochel on how Candor is moving into post close QC automation and enabling dynamic servicing strategies via robust and detailed data. This week’s is sponsored by Candor. With Candor’s Machine as an Underwriter, lenders modernize their manufacturing infrastructure making them immune to margin, capacity, and staffing challenges forever.)

Published On: July 25, 2022 / Categories: Mortgage News /