TABLE OF CONTENTS
MARKET BRIEF 📰
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Since February 27 the biggest pain for the bond market has been the Iran situation, pushing key mortgage-bond coupons 220 to 350 basis points lower.
Meanwhile, this week was filled with inflation-focused reports, including CPI and PPI.
Fortunately, the Consumer Price Index was in line with expectations and Producer Price Index had no surprises either.
RATE IMPACT 💥
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Mortgage rates do not technically rise or fall. Instead, it is the price of rates that changes while the full menu of options remains constant.
Bond prices have an INVERSE relationship with the price of mortgage rates.
Economic data has been bond-friendly lately, keeping a lid on things. At least in the context of the dangerous levels tested just a few weeks ago.
This week’s inflation data helped mortgage rates improve again, but Friday gave back some of those gains despite no major headlines that warranted the reversal.
Ultimately, mortgage rate pricing still finished the week improved, but remains virtually unchanged over the last 30 trading days.
However, there is a lot more ground to recover.
The same rate quoted before the Middle East conflict began would now cost $2,594 more per $100K of loan amount (259 bps), or nearly $13,000 more on a $500K loan
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