[Matt] This is Matt Graham with the MBS live market update. Last week was a refreshing change of pace for the bond market because we essentially confirmed that yields have leveled off after the fairly abrupt spike that took place starting as long ago as late September, but definitely At the beginning of October, especially following the jobs report at the beginning of October, volatility and upward momentum and rates lasted through election day. But as of that evening, the 4.42 level in 10 year treasury yields. served as a central point of orbit for yields. And we stayed within a fairly narrow range of that despite some initial volatility last week did the most of any recent week to confirm that even though there have only been two full weeks since election week. But nonetheless, it was a good showing with. Moderately important economic data at times wouldn't say there was any top tier data, but we did have S&P services. PMI come out stronger than expected, and that was offset by an internal component of the same report showing that price pressures rose at the softest pace since 2020 jobless claims also came in stronger than expected at the headline level, but those were offset by continued claims coming in at the highest level in several years. There was the typical raft of housing market data, and nothing too interesting in that regard. Builder confidence was lower. It's not exclusively a story of lower construction numbers. We can also tie that to the general. Rise in rates that's taken place over the past few months and the generally higher rates for the past few years indeed Confidence has been much lower than historically normal and a drop coincides with the big rate spike in 2022 Not new news. They're heading into the current week Bonds are in sharply stronger territory after Trump's treasury secretary pick, Scott Besant, was announced. And that was generally viewed to be the more favorable option for the bond market, due to a certain measure of assumed fiscal conservatism, as well as a potentially more tempered hand on any role that treasury is going to have in administrating tariffs at the very least, we know that Besant has been a voice of reason when it comes to implementing tariffs in what he called a layered approach. Whether or not that has a bearing on how things actually happen remains to be seen, but at the very least fiscal conservatism is good for rates because it implies that there will be less treasury issuance than there otherwise might've been. All other things being equal, at least to whatever extent Besant has a say in it. I think the extent that we can know such things at this point is reflected in the pace of movement. We're only down 10 bps in treasury yields. We're still trading at 4.3%. So, it's not as if there is some sweeping magical change that has occurred in the bond market. But it is a refreshing change of pace in the small scale in the short term, all of the things being equal. The remainder of the week we'll see a greater than normal amount of data packed into just a few short days due to the Thanksgiving holiday. There is no big-ticket data today, but that changes tomorrow. We'll get there. Updated home prices, and this is the report that results in the conforming loan limit being updated will also get new home sales and consumer confidence and FOMC minutes. Believe it or not, none of that laundry list is a particularly big market mover. Some might say the FOMC minutes would be, but we've heard so many Fed speeches. Since the last announcement that those minutes will be, we'll look back into the past. Whereas the conversation has definitely evolved since then following day and really the last day of the week. Wednesday sees the crux of this week's economic reports with durable goods, GDP, PCE inflation, both the quarterly version that's included in the GDP data, as well as the monthly version, which usually doesn't come out until a day after the quarterly version. That is the inflation index, the monthly version that the Fed is most interested in when it comes to benchmarking the progress toward the 2% inflation goal, looking for a 2% year over year core PCE. As far as market movement is concerned, the monthly core PCE is more interesting. It's expected to come in at 0.3%, and if it were to come in at 0.2 or lower, that would probably be. Good for bonds, all of the things being equal. And if it comes in at 0. 4, that would probably reinforce the concern that the market has over inflation going forward. And that concern simply being, Hey, maybe it's not quite dead yet. So to whatever extent the data informs that the bond market should react, but we always want to take Thanksgiving week with a grain of salt because there can be a lot of volatility that is serendipitous and doesn't necessarily stick around in the following week. The following week will be highly consequential due to the big jobs report among other economic reports. That's going to do it for this week. Back to you.
Matt Graham, Founder and CEO, MBS Live
Matt began as an originator in 2002. He fell in love with the idea of following MBS in real-time but felt that existing products were only scratching the surface. Thus was born MBS Live in 2007, the first-of-its-kind platform with real-time market data/analysis, and live chat with analysts, traders, and originators around the country. He is currently the Founder and CEO of MBSLive!
He's been covering bond/mortgage markets, writing commentary, alerts, and chatting with the live community every business hour of every business day ever since.
Matt also serves as the Chief of Operations for mortgagenewsdaily.com, where he is one of the industry's most respected mortgage rate experts, frequently quoted in the media. Mortgage News Daily's rate index is used as the definitive resource on day-to-day mortgage rate averages.
He lives in the Pacific Northwest with his wife and son where he enjoys skiing, fishing, coaching youth sports, playing the guitar, and more DIY projects/hobbies than he'd care to admit.