UMBS opened down 5 bps today.  S&P futures up 9.5 points.

The week ahead won’t have much in the way of market-moving data, although we will get quite a bit of Fed-speak. We will get some real estate data with existing home sales and new home sales. Mortgage secondary folks will be attending the MBA Secondary Conference in NYC. Markets will close early on Friday ahead of the Memorial Day holiday.

On Wednesday, we get latest round of Fed Minutes from the May FOMC meeting. Investors remain hopeful for additional clues from the Fed minutes about the timing and frequency of rate cuts, however the Fed has continued on it’s path of reviewing economic data to show that inflation has eased to prescribed levels. The Fed’s stance will likely be echoed by Fed officials Today and Tomorrow at various speaking engagements.

Single-family built for rent housing grew in the first quarter of 2024, according to the NAHB. There were approximately 18,000 units built for rent in Q1 2024.

For all the consternation about the impact of high housing costs on the young, Millennial and Gen Z borrowers took out 40% of US mortgages in 2023. “First-time buyers aren’t as spooked by high rates as people who are trying to move up to a bigger or better home,” said Antonia Ketabchi, a Redfin Premier agent in Maryland. “High costs are still a challenge, but younger people are excited about the fact that they’re looking to buy their first home, and they’re not locked in by a low mortgage rate because until now they’ve been renting.

There’s a risk that a theme will emerge in the coming days, but a theme that only matters to people who write daily commentary on the bond market.  It involves an absence of new, interesting things to say as well as plenty of repetition. If today was any indication, the bond market’s base case for this week is to play the “11 day weekend” game that we joked about last week.  It looked like we might actually have some volatility earlier in the session.  Bonds sold off modestly at the 8:20am CME open, but the damage was limited to roughly 3bps in 10yr yields and much less than that by the 3pm CME close.

UMBS ended the day down 5 bps at 100.35.

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