Solid Week Despite Friday’s Selling, But Next One is More Important

Heading into the current week, it wasn’t entirely clear what sort of value any of the scheduled events could offer in terms of shaping the broader trends in rates.  The first 4 days ended up acting as a correction to the previous week’s runaway sell-off, but a correction that was kicked off by last Friday’s “Fed pivot” headlines.  Friday itself ended up being a bit of an afterthought with moderate overnight losses giving way to flat trading in the domestic session.  Data was uneventful as traders turn their attention to next week’s bigger-ticket events and then the all-important CPI data the following week.

Econ Data / Events

PCE Inflation, Core, y/y

5.1 vs 5.2 f’cast, 4.9 prev

Employment Cost Index

1.2 vs 1.2 f’cast, 1.3 prev

Pending Home Sales

-10.2 vs -5.0 f’cast, -1.9 prev

Consumer Sentiment (final)

59.9 vs 59.8 f’cast
1yr inflation revised down 0.1

Market Movement Recap

08:31 AM Moderately weaker overnight with no real push back after modestly lower PCE inflation.   10yr yields up 8bps at 4.01 and MBS down 5/8ths of a point in early, illiquid trading.

10:04 AM Decent bounce after opening weakness.  Mostly tradeflow related at 930am NYSE open.  MBS down only a quarter point now and 10yr up only 3.4bps at 3.959

12:30 PM Bonds off best levels, but MBS outperforming over the past 2 hours.  5.0 MBS down 3/8ths and 10yr yields up 7.7bps at 4.004

03:56 PM Some weakness heading into the 3pm close, but very gradual and now bouncing to remain in the day’s prevailing mid-day range.  10yr yields and MBS both in line with the last update.

Published On: October 28, 2022 / Categories: Mortgage News /