UMBS flat on the open – down 3 bps.

The big number this week will be the Personal Income and Outlays report on Thursday. The report contains the PCE Price Index, which is the Fed’s preferred measure of inflation. The Street is looking for headline inflation to come in at 2.4% and the core rate is expected to come in at 2.8%.

We will also get a lot of housing data with new home sales, home prices, and pending home sales. Finally, we will get the ISM data and GDP.

Credit card rates have hit a record high, according to the CFPB. The data only goes back to 1994, so it ignores the high interest rate 1980s. The CFPB notes that the spread between the prime rate and the interest rate on the cards has been growing. It compares the APR spread versus late payments and insinuates that the credit card companies are price-gouging.

The S&P 500 hovered near 5,100. Inc. has effectively become a member of the Dow Jones Industrial Average, while Berkshire Hathaway Inc. set another all-time high, pushing the market value of Warren Buffett’s conglomerate closer to $1 trillion. Treasury 10-year yields rose four basis points to 4.28%.

Stock markets have room to extend gains beyond record highs if the economic outlook remains upbeat and investors pour money into recent laggards, according to Goldman Sachs Group Inc. strategists.

The S&P 500’s run to an all-time peak has left investor positioning “extremely” concentrated in the so-called

Magnificent Seven.

As the bond market looks at the 5yr Treasury auction in the rearview, there’s a figurative sigh of relief.  Granted, it’s not enough to get Treasuries or MBS back into positive territory, but it does seems to confirm the “anxiety” trade driving the weakness earlier in the day.  That conclusion is further supported by the Treasury outperformance of MBS in the afternoon after the underperformance earlier in the day.  Despite the intraday volatility, none of of the bigger picture range boundaries were threatened and there were no interesting implications for bond market momentum.  “Generally sideways since CPI and waiting on the next big data” has been a good recap for nearly 2 weeks now.

UMBS ended the day down 17 bps at 100.19

Promising Updated MBA Forecast: The MBA released their recent forecasted predictions on mortgage originations (1 to 4 family). A welcome sight is that they predict a 25+ percent increase in 2Q over 1Q 2024 and a 13 percent increase in 3Q over 2Q 2024. In addition, the 3Q 2024 prediction is nearly 22 percent higher than the same quarter in 2023’s actual originations. As volumes continue to rise quickly, having a solid quality control program is as important as ever in order to continue to produce quality loans while mitigating risk.

The difference between median housing costs for homes with a mortgage and median gross rent is $563 a month. The spread in costs between renting and owning a home with a mortgage is widest in the San Jose, Calif., San Francisco, and New York metros. The difference between the median monthly housing costs for homes with a mortgage and the median monthly gross rent in these metros is $1,341, $1,303, and $1,289, respectively. Phoenix, Orlando, Fla., Jacksonville, Fla., and Atlanta have the narrowest gaps between renting and owning a home with a mortgage. In Phoenix and Orlando, median gross rent costs are $87 and $145 less than median monthly housing costs for homes with a mortgage. In both Jacksonville and Atlanta, the difference is $216.

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