𝗠𝗼𝗿𝘁𝗴𝗮𝗴𝗲 𝗥𝗮𝘁𝗲 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁: 𝗥𝗮𝘁𝗲𝘀 𝗰𝗼𝘂𝗹𝗱 𝗯𝗲 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗲

Mortgage rates have been slightly sideways today, however last week the MBS market saw a positive improvement of +33 bps, reducing mortgage rates or fees significantly. Though last week saw moderate volatility, this current week could see greater movement of interest rates day by day. Wednesday marks a particularly important event when the Fed releases their meeting and presentation for the public, followed by key information on jobs and wages over Friday and consumer confidence data on Tuesday.

𝗪𝗵𝗮𝘁’𝘀 𝗮𝗳𝗳𝗲𝗰𝘁𝗶𝗻𝗴 𝗿𝗮𝘁𝗲𝘀 𝘁𝗵𝗶𝘀 𝘄𝗲𝗲𝗸:

This week is sure to be a busy one for those interested in tracking interest rate movements. Things will get off to a quick start with the release of the Federal Open Market Committee’s Interest Rate Decision and Policy Statement on Wednesday. As the markets largely expect, this hike is expected to be only 25BPS but it is important for investors and analysts to pay close attention to their message as it could leave open the possibility of one or two more hikes. After that, we will have a live presser with Fed Chair Powell. Beyond our Fed, both the Bank of England and European Central Bank are also likely to bring rate hikes this week (50BPS each). Finally, we can anticipate a plethora of job-related data culminating in Friday’s Nonfarm Payroll report, relating wages and unemployment with strong implications for interests rates. All in all there’s a lot at stake this week so it promises to be an impacting period for rates.

The UMBS 5.5 coupon (MBS or mortgage backed securities) at 101.22, -28bps on the day and about -8bps from when pricing came out on Friday. We’ve got strong technical support around 101.15 though, and it is unlikely we see mortgage bonds break through that level until the Fed fireworks… then all bets are off.

The 10yr Treasury yield at 3.56, with technical support at 3.60.