In today’s mortgage update on September 26th, Mortgage-Backed Securities (MBS) opened down 5 basis points. Treasury and European government bond yields dipped after reaching decade highs, while the Bloomberg dollar index remained stable. Oil prices retreated due to the strengthening dollar, impacting demand.
Tightening monetary policies are affecting high-flying tech stocks, whose future profits are less attractive at higher discount rates.
Key economic data included the FHFA Home Price Index rising by 0.8% month-on-month and 4.6% year-on-year, with Central and Mountain regions leading the way. Consumer confidence fell to 103, and the Case Shiller Home Prices year-on-year showed a slight increase of 0.1%.
New Home Sales declined by 8.7% year-on-year but rose by 5.8% on a year-over-year basis, with a 7.8-month supply of houses for sale, highlighting the need for new home sales to drive the housing market.
Investors are awaiting PCE data to gauge the possibility of another rate hike this year. The Fed’s adjusted rate cut forecast for next year suggests rates may stay higher for longer due to economic resilience and elevated inflation. Concerns of a government shutdown persist with negotiations ongoing.
Bonds initially improved overnight but reversed course after the US bond market opened, with 10-year yields hitting long-term highs above 4.56%. MBS lost ground, reflecting a lack of clear market drivers. While losses were smaller than the previous day, uncertainty remains as markets await significant upcoming data.
MBS closed down 20 basis points on the 6.0 coupon, ending at 98.75.