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MBS Highway Daily Updates 02/22/2023

Current position: Carefully Floating

Stocks and mortgage bonds have both rebounded after an ugly day in the markets yesterday.

St. Louis Fed President James Bullard

Bullard was on CNBC this morning and said that the January Jobs Report was a "blowout jobs number" and that the "unemployment rate ticked down, not up, to a 50-year low."


We can see into the mindset of the Fed, who are taking the numbers at face value—or they know, and this gives them cover to continue hiking. He also said that he believes the Fed needs to hike three more times to get the Fed Funds rate at a properly restrictive level.

Later this afternoon at 2:00 pm ET, the Fed minutes from the February 1 meeting will be released, but the last meeting was before the jobs report and CPI release.


Mortgage Apps

The MBA released their mortgage application data for last week, showing that purchases fell 18% last week and are now down 41% year over year. Interest rates increased from 6.375% to 6.625%, which is 2.625% higher than this time last year. Refinances fell 2% last week and are down 72% from this time last year.

CoreLogic Single Family Rental Report

CoreLogic reported that single-family rents were up 6.4% year over year in December, down from 7.5% in November. Rental increases have clearly been decelerating, much like we have been seeing in the Apartment List report. Once this deceleration catches up within the inflation reports, we will see meaningful progress lower.

Technical Analysis

Mortgage bonds are moving higher and are fighting to get back above an important technical level of 99.711. The 10-year is moving lower this morning, back down to 3.91%, just above an important level of 3.90%. If yields can fall below 3.90%, there is a path to the 100-day moving average at 3.75%. With bonds rebounding, begin the day carefully floating.


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