WTMS Blog Today = What’s up in Mortgage Today – 04/12/24 >>>>

Mortgage securities took a significant dive today, with UMBS dropping sharply as investors reacted swiftly to the latest CPI numbers. The inflation data, particularly the core metrics, exceeded expectations, fueling speculation that the Federal Reserve might pause on rate cuts, with eyes now turning to September and December. Notably, shelter and gasoline were the main contributors to the increase, alongside dining out and transportation costs. Historically, there’s been about a 14-month gap between the Fed’s final rate hike and the onset of a recession; by that measure, we could be looking at an economic downturn by this fall. Today’s bond market activity reflected a heightened sensitivity to inflation reports, as even a small deviation from forecasts led to notable shifts in bond prices. Despite this, the major moves weren’t solely due to domestic issues, as geopolitical tensions added their own twist to the day’s volatility. By closing time, the bond market had seen better days, with UMBS down significantly, underscoring the market’s wary stance on the interplay between inflation and central bank policy.

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