UMBS are up 8 bps on the morning.

Bonds recovered some of yesterday’s losses in the overnight session with European markets leading the way on much weaker econ data.

The US trade deficit widened by more than expected in September, reflecting the resilience of American demand for foreign goods.  The shortfall in goods and services trade expanded 4.9% from the prior month to $61.5 billion, Commerce Department data showed Tuesday. The figures aren’t adjusted for inflation. The value of imports were up 2.7%, while exports increased 2.2%.

Neel Kashkari isn’t convinced rate hikes are over. “Under tightening will not get us back to 2% in a reasonable time,” Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said in an interview with The Wall Street Journal on Monday. He is awaiting further data.

Chicago Fed President Austan Goolsbee thinks we could be on a “golden path” of lowering inflation without causing a recession.

Mortgage delinquencies picked up in September, according to the Black Knight Mortgage Monitor. The DQ rate increased to 3.29% which was up 12 basis points from August and 13 basis points from a year ago. This was the largest increase in the past 2.5 years. 30 day DQs rose by 5.1% making it the fourth consecutive monthly rise, while 60 day DQs have risen for 6 months in a row.

Every now and then European markets do favors for the US bond market narrative.  They can also detract, but today is not one of those days.  Weaker overseas economic data led to overnight gains in EU bonds.  Those gains spilled over to US bonds and largely account for the moderate rally seen so far on Tuesday.  With that, the present week looks super sideways coming off last week’s rally (as opposed to looking “corrective”–something we may have worried more about yesterday).  Hurdles remain in the form of the Treasury auction cycle.  Today’s 3yr is somewhat relevant, but the 10 and 30yr tenors are more consequential over the next 2 days.

UMBS closed the day down 17 bps at 100.67.  Ginnies faired a bit better.

WeWork, once valued at $47B at its peak, has filed for Chapter 11 bankruptcy protection in New Jersey federal court. WeWork shares were halted Monday ahead of the filing.

The Israeli military said yesterday its forces had completed encircling Gaza City after an overnight barrage of airstrikes, cutting off the populous city center from the rest of the Gaza Strip and effectively dividing the enclave into north and south regions.

Rocket reported third quarter numbers that beat expectations. Closed loan volume fell 13% YOY to $22.2 billion. Gain on sale margins increased by 10 basis points to 2.79%. Rocket is guiding for a seasonal slowdown in the fourth quarter which is to be expected.

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