Dots, Dots, Dots, Dots

What’s the most important ingredient in tomorrow’s Fed announcement and related events?  The dots, of course! Released in the Fed’s quarterly summary of economic projections, the dot plot shows where each FOMC member sees the Fed Funds Rate at various points in the future.  Powell has instructed markets to ignore the dots on multiple occasions, but traders keep trading them.  We see no reason for that to change this time around.  Indeed, with Powell bound to repeat the same speech he’s been giving for the past several months, the dot plot is one of the only places we can see interesting things happen.

Econ Data / Events

Core M/M CPI

0.3 vs 0.3 f’cast, 0.2 prev

Core Y/Y CPI

4.0 vs 4.0 f’cast, 4.0 prev

Market Movement Recap

08:42 AM Initially stronger and now weaker after CPI.  Still stronger day over day.  MBS up 2 ticks (0.06) and 10yr down 1.7bps at 4.22 (up from lows of 4.153).

12:30 PM Decent recovery for MBS with 6.0 coupons now up an eighth on the day.  10yr down 1bp at 4.227, broadly sideways after the initial sell-off.

01:08 PM Additional gains after 30yr bond auction.  10yr down 3.1bps at 4.206.  MBS up 3 ticks (.09).

03:59 PM Gradual gains continue. MBS near best levels, up 6 ticks (.19). 10yr down 3bps at 4.206.

Published On: December 13, 2023 / Categories: Mortgage News /