Beware The Token Recovery Potential

Beware The Token Recovery Potential

While there's no way to know exactly when it will happen, there's always some point at the end of an epic sell-off where prices have dropped enough to attract buyers and sellers have had their fill.  A technician might simply say bonds were so oversold that they couldn't sell anymore, but such conclusions are typically made in hindsight.  It's important to understand that these sorts of bounces can look big and meaningful at first, but may prove to be nothing more than temporary.  Today is already at risk of providing an example.

Market Movement Recap
08:58 AM

Token recovery overnight, no reaction to Durable Goods, and now selling off a bit as bonds follow UK markets.  10yr still down 6.5bps at 3.864 and MBS up 11 ticks (.34), but down more than a quarter point from the highs.

09:31 AM

Gains mostly gone now with yields led higher by a sell-off in EU bonds.  MBS down 5/8ths intraday and up only 6 ticks (.19) from y'day.  10yr yields down only 3bps after being down more than 12bps at the best levels. 

Latest Video Analysis

Why Do US Rates Suddenly Care About The UK?

MBS & Treasury Markets
UMBS 5.0 96.69 +0.19 10YR 3.951% +0.023% 9/27/2022 11:17AM EST
Consume Confidence  108 vs 104.5 f'cast New Home Sales 685k vs 500k f'cast Internal component of the confidence data were strong as well.  The data also hits as Fed's Bullard is reinforcing the same old hawkish message. MBS are now down 5 ticks (.16) on the day and a FULL POINT from the highs. 10yr yields are up 3bps after being down more than 10 earlier.  Lenders who were out with rates early could be considering negat...   READ MORE
Today's Mortgage Rates
30YR Fixed 6.87% +0.17% 15YR Fixed 6.15% +0.15% 9/26/2022
The most recent historical high water market for mortgage rates was "14 years."  It was broken so many times in September that we officially declared it to be boring last Tuesday.  Now, less than a week later, 14-year highs would be more exciting than boring.  As of mid-day today, we're officially at 20 year highs. Perhaps it should be "unofficial," because our daily rate records only go back to the beginning of 2009.  We're relying on weekly survey ...   READ MORE
Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Sep 27
8:00AM Aug Build permits R chg mm (%) Aug -8.5 -10.0
8:00AM Aug Build permits R numbr mm (ml) Aug 1.542 1.517
8:30AM Aug Durables ex-defense mm (%) Aug -0.9 1.1
8:30AM Aug Durables ex-transport (%) Aug 0.2 0.2 0.2
8:30AM Aug Durable goods (%) Aug -0.2 -0.4 -0.1
8:30AM Aug Core CapEx (%) Aug 1.3 0.2 0.3
8:55AM w/e Redbook yy (%) w/e 11.0 10.5
9:00AM Jul CaseShiller 20 mm nsa (%) Jul -0.8 0.4
9:00AM Jul Case Shiller Home Prices-20 y/y (% ) Jul +16.1 17.0 18.6
9:00AM Jul CaseShiller Home Prices m/m (%) Jul -0.4 0.2 0.4
9:00AM Jul FHFA Home Prices y/y (%) Jul 13.9 16.2
9:00AM Jul FHFA Home Price Index m/m (%) Jul -0.6 0.1
10:00AM Sep Rich Fed, services index Sep 0 -12
10:00AM Aug New Home Sales (ml) Aug 0.685 0.500 0.511
10:00AM Sep Rich Fed comp. index Sep 0 -8
10:00AM Sep Consumer confidence Sep 108.0 104.5 103.2
10:00AM Sep Rich Fed manuf shipments Sep 14 -8
10:00AM Aug New Home Sales (%) (%) Aug 28.8 -12.6
1:00PM 5-Yr Note Auction (bl) 44
Wednesday, Sep 28
7:00AM w/e Mortgage Market Index w/e 264.7
7:00AM w/e MBA Purchase Index w/e 200.1
7:00AM w/e MBA 30-yr mortgage rate (%) w/e 6.25
7:00AM w/e MBA Refi Index w/e 588.1
10:00AM Aug Pending Sales Index Aug 89.8
10:00AM Aug Pending Home Sales (%) Aug -1.4 -1.0
10:30AM w/e Crude Oil Inventory (ml) w/e 0.333 1.142
10:30AM w/e Gasoline Inventory (ml) w/e 0.400 1.569
10:30AM w/e Petroleum Distillate Inventory (ml) w/e -1.267 1.231
11:30AM 2-Yr Note Auction (bl) 22
1:00PM 7-Yr Note Auction (bl) 36
Read My Latest Newsletter
In order to make the most of today's newsletter, you'll need a basic understanding of the Fed Funds Rate (the thing the Fed actually hikes or cuts in an attempt to keep inflation in a target range) and the fact that mortgage rates are very different from the Fed Funds Rate. Here is a handy primer that lays out all the reasons for that in reasonably plain language:  No, The Fed Hike Doesn't... READ MORE