We have had some pretty exciting changes in the market over the last two weeks than we have had in the mortgage world in a while. On Wednesday, November 9th, The average 30yr fixed rate was fairly close to the highest levels its been since 2002. By Thursday Nov. 10, it had fallen more than half a percent to the lowest level in nearly 2 months–the biggest single day drop on record.

Pricing this morning should be similar to last week. Bond prices are likely to bounce all over the place, as was already the case Monday morning, but most lenders aren’t going to reprice because they recognize the volatility is due to illiquidity… reduced trading volume this holiday week. The outlook for the week is good overall, no reason to really fear that rates will rise this week. Traders are really waiting to see what comes in December, with the next CPI inflation report on the 13th and the Fed meeting on the 14th.

Other than a couple Treasury auctions, there’s nothing happening until Wednesday on the economic calendar. Of course the markets are closed on Thursday for Thanksgiving, and close early on Friday.

These are the three areas that have the greatest ability to impact rates this week: 1) Central Banks, 2) The Fed and 3) Domestic News

1) Central Banks: We will get key interest rate decisions from China and New Zealand. NZ is expected to raise their rate by 75BPS.

2) The Fed: We got a mixed bag last week with very Hawkish, Moderate and Dovish tones from different speakers. This week we get the Minutes from the last FOMC meeting on Wednesday where the Fed raised interest rates by 75BPS. We will also hear from Mester, Daly And Bullard.

3) Domestic News: We basically get all of our economic data on Wednesday. Initial Jobless Claims will get a lot of focus to see if all of these tech firings (Twitter, Meta and Amazon) start to show up. Consumer Sentiment is expected to remain at the anemic preliminary level of 54.7 and Durable Goods will get a good look from traders as well.

TECHNICALS:

The UMBS 5.5 coupon (MBS or mortgage backed securities) at is at 100.47.

The 10yr Treasury yield at 3.784.

The 10yr Treasuries don’t directly determine mortgage rates, but sudden moves in the 10yr Treasuries tend to impact the bonds that do affect mortgage rates.