The Fed has zero f--ks to give as mortgage rates nuked by war 🏦📈😵
The Week Ahead
WEEK AHEAD 🗓️
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The last two weeks have been devastating for mortgage rates, with some MBS coupons falling in price by more than 200-bps.
The mortgage bond sell-off pushed the price of mortgage rates up 125 bps since the February 27 multi-year low.
This is just 8-bps short of a 6-month high (September 25).
Unfortunately, there was no resolution in the Middle East this weekend and no reprieve from the economic calendar in the week ahead.
Headlining this week’s schedule is the Fed rate decision, followed by Chairman Jerome Powell’s press conference.
Given the way Powell has been treated by the current administration I wouldn’t expect much sympathy from him, especially when oil price shocks have been sending bond yields higher across the curve.
Had the Fed cut more aggressively prior the knee jerk from bonds might have been worse.
It would have also left the central bank with less ammunition if the post-war economy slides into recession, requiring a boost from aggressive Fed policy (large rate cuts).
In addition to Wednesday’s FOMC update, we also have two oil related reports, Manufacturing data (including PPI), and two longer-duration Treasury auctions (10 year and 20 year).
Absent any positive outcomes in Iran the best we can hope for, given the schedule this week, is a cauterizing of the wound but it is more likely that bonds continue to bleed.
Stay tuned for the Lock-O-Meter rate lock guide tomorrow as part of the Mortgage Rate Price Tracker.
Thanks for reading.
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