In today’s Mortgage Update on October 16th, we cover the key financial highlights. Mortgage-backed securities (MBS) dropped 34 basis points, while S&P Futures rose by 23.5 points.

Bond values fell due to “position-squaring” amid a relatively calm Israel/Hamas situation over the weekend, boosting stock markets.

Debate centers on the appeal of “quality” U.S. Treasury debt in a “flight to quality” scenario. The 10-year yield fell 19 basis points since the recent Hamas attack.

NAR’s Affordability Index hit a 32-year low at 91.7, and Redfin predicts a dip in existing home sales to 4.1 million, the lowest since 2008.

Fed’s Harker supports a rate pause, while numerous Federal Reserve officials will speak this week, raising questions about transparency versus market stability.

Cross County explores acquiring Fairway, signaling potential industry changes. The Fed’s reluctance to raise rates unless inflation surges caused uncertainty and selling. A bond auction clarified market direction, followed by a reversal of position-squaring and risk aversion trades.

Bond markets await economic data, with Tuesday’s Retail Sales report as a key event.

UMBS 6.0 ended the day down 47 basis points, adding to market volatility. Stay tuned for more mortgage insights.