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Big Shift Toward 5.0 Coupons Continues
Big Shift Toward 5.0 Coupons Continues
Mortgage rates have lurched rapidly lower in September as 5.0 UMBS have stolen the show from 5.5 UMBS. As a reminder, there is only a certain range of rates allowed in either bucket. 5.5s go all the way up to 6.625% and investors buying MBS would prefer not to get stuck holding a burning bag of 6.625% loans in a market where those borrowers are already on the edge of being in the money on a refi. Bottom line, it's the fastest/biggest shift in 5.0 outperformance since late 2023, and today's installment brought the spread between the two coupons to the tightest levels since early October 2024. Lo and behold, that's the last time rates were in this territory. Spreads spiked back to wider levels on October 4th owing to a strong jobs report. This October's jobs report will be in focus for similar reasons, but before that, near-term volatility risks surround Wednesday's Fed dot plot.
Initial weakness after Retail Sales, but avoiding sharp selling. MBS unchanged and 10yr only up 1bp at 4.049
Very decent recovery. MBS up 1 tick (.03) and 10yr down almost 1bp at 4.033
MBS unchanged to 1 tick (.03) weaker. 10yr down 0.9bps at 4.032
Holding modest gains. MBS up 2 ticks (.06) and 10yr down 1.3bps at 4.027
Big Shift Toward 5.0 MBS Continues
| Time | Event | Period | Actual | Forecast | Prior |
|---|---|---|---|---|---|
| Tuesday, Sep 16 | |||||
| 8:30AM | Aug Export prices mm (%) | Aug | 0.3% | 0% | 0.1% |
| 8:30AM | Aug Retail Sales Control Group MoM | Aug | 0.7% | 0.4% | 0.5% |
| 8:30AM | Aug Retail Sales (ex-autos) (%) | Aug | 0.7% | 0.4% | 0.3% |
| 8:30AM | Aug Retail Sales (%) | Aug | 0.6% | 0.2% | 0.5% |
| 8:30AM | Aug Import prices mm (%) | Aug | 0.3% | -0.1% | 0.4% |
| 9:15AM | Aug Industrial Production (%) | Aug | 0.1% | -0.1% | -0.1% |
| 10:00AM | Jul Business Inventories (% ) | Jul | 0.2% | 0.2% | 0.2% |
| 10:00AM | Sep NAHB housing market indx | Sep | 32 | 33 | 32 |
| 1:00PM | 20-Yr Bond Auction (bl) | 13 | |||
| 8:00PM | International Monetary Market (IMM) Date (%) | ||||
| Wednesday, Sep 17 | |||||
| 12:00AM | Roll Date - UMBS 15YR, Ginnie Mae 15YR | ||||
| 7:00AM | Sep/12 MBA Purchase Index | Sep/12 | 169.1 | ||
| 7:00AM | Sep/12 MBA Refi Index | Sep/12 | 1012.4 | ||
| 7:00AM | Sep/12 Mortgage Market Index | Sep/12 | 297.7 | ||
| 8:30AM | Aug Housing starts number mm (ml) | Aug | 1.37M | 1.428M | |
| 8:30AM | Aug Building Permits (ml) | Aug | 1.37M | 1.362M | |
| 10:30AM | Sep/12 Crude Oil Inventory (ml) | Sep/12 | 3.939M | ||
| 2:00PM | Fed Interest Rate Decision | 4.25% | 4.5% | ||
| 2:00PM | FOMC Economic Projections | ||||
| 2:00PM | Interest Rate Projection - 1st Yr | 3.6% | |||
| 2:00PM | Interest Rate Projection - Current | 3.9% | |||
| 2:00PM | Interest Rate Projection - 2nd Yr | 3.4% | |||
| 2:00PM | Interest Rate Projection - Longer | 3% | |||
| 2:00PM | Interest Rate Projection - 3rd Yr | 3.1% | |||
| 2:30PM | Fed Press Conference | ||||
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