In today’s mortgage update on October 4th, Mortgage-Backed Securities (MBS) opened flat but soon dipped 28 basis points from the day’s high. Global sovereign bond yields continued their relentless upward trend, with the 10-year nearing 4.9% in the overnight session. However, there was a temporary relief after a weak ADP employment report.

Economic data for the day included:

  • ADP Employment: 89k vs. a forecast of 153k (177k previously)
  • ISM Services: 53.6 (unchanged from the previous)
  • ISM Business Activity: 58.8 vs. a forecast of 56.5 (57.3 previously)
  • ISM Prices: 58.9 (unchanged from the previous)

Atlanta Fed President Bostic suggested one rate cut in 2024.

The day’s economic data resulted in either flat or notably weaker outcomes, leading to a bond market rally. This response aligns with logical expectations, which have been the exception lately. While short-term pullbacks are part of the current rising rate trend, the availability of data as a justification makes this one particularly straightforward. The bigger picture remains unchanged, with focus on Friday’s jobs report.

MBS closed the day up 36 basis points, closing at 97.83.

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