In today’s update on October 2nd, Mortgage-Backed Securities (UMBS) opened down 30 basis points, with S&P Futures down 7.25 points. The start of a new month and quarter saw a spike in 10-year Treasury yields due to the avoidance of a government shutdown and new month trading. Bonds corrected lower at the end of the previous week but rebounded, signaling investor anticipation of higher interest rates for an extended period.
This week, the focus shifts to economic data delayed by the shutdown, following a government funding deal through early November. The ISM Manufacturing PMI showed improvement in September. Employment data will dominate the week, culminating in Friday’s jobs report, expected to add 160,000 jobs in September.
An Apartment List report revealed a 0.5% rent decrease for September, down 12% year-on-year for new leases but up 3.1% with renewals. Average hourly earnings are expected to rise by 4.3% year-on-year.
The previous month and quarter ended with substantial bond market losses, pushing 30-year fixed-rate mortgages to nearly 7.5%, up approximately 30 basis points over the past 30 days. The stop-gap bill preventing a government shutdown led to instant bond market selling. Selling intensified after the 10 am ISM Manufacturing data, with 10-year yields reaching a new long-term high at 4.701, and UMBS ended the day down 53 basis points.