Last Week’s Market Recap:

Mortgage rates improved slightly through the early part of the week but gave back the gains to end the week basically unchanged. Mortgage rates remain well below the high mark set back in November when most consumers were facing rates in the mid-7s.

This Week’s Mortgage Forecast:

This week could see mortgage rates could creep higher ahead of next week’s Fed meeting. Rates aren’t likely to make any big moves, but it is possible that rates could be slightly worse to end the week unless they get help from this week’s economic data. It is next week’s Fed meeting that will have the strongest influence on which direction mortgage rates move next. More job cuts from tech companies, Spotify today cutting 6.0% of its workforce (600 jobs); not many compared to the 10s of thousand cuts already announced. Not sure of the total but guessing, 80K job cuts in total.

These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Central Banks and 3) GDP

1) Inflation: We get the Fed’s key inflation gauge on Friday with PCE as well as Personal Incomes and Spending. Will this follow the recent softening in CPI and PPI or buck the trend? The weaker this data is, the better it will be for pricing.

2) Central Banks: We get a key interest rate decision from the Bank of Canada on Wednesday, they are expected to raise by only 25BPS.

3) GDP: We get the final look at the 3rd QTR GDP and our first look at the 4th QTR GDP data on Thursday.

Technicals:

The UMBS 5.5 coupon (MBS or mortgage backed securities) at 101.03, -17bps on the day.

The 10yr Treasury yield at 3.55, not much different than where we found it yesterday.