In the world of mortgage-backed securities (UMBS), we’re seeing a 61 basis point drop, while S&P futures opened down by 28.25 points today.

The Treasury market is experiencing unprecedented levels of volatility, not seen since March 2020. The US 30-year yield has shifted nearly 13 basis points per day over the last five trading days, marking the highest in over three years, and more than three times the daily average over the past decade.

Retail sales are making headlines too. They’ve beaten expectations, coming in at 0.7% (with a 3.8% year-over-year increase). Last month’s numbers even got revised up from 0.6% to 0.8%. Excluding autos, we’re still in good shape at 0.6%, and when we exclude autos, gas, and building materials, we’re at the same level.

Additionally, industrial production rose by 0.3% month-over-month, showing signs of a robust economy.

Now, here’s the catch: this hot economy isn’t great news for bonds. Homebuilder confidence is shrinking, and some buyers are being priced out due to higher interest rates.

While we hope for some buying to come soon, today wasn’t the day. The bond market has faced a series of tough days recently, and UMBS ended down 53 basis points at 97.16.

In summary, it’s been a day of big moves, with retail sales data surprising to the upside, leading to spikes in yields and mortgage rates hitting new multi-decade highs. Stay tuned for more updates as we navigate these challenging market conditions.

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