MBS are down another 30 bps this morning. 10y up 7.

Neither of this morning’s reports were great for bonds.  Q4 is ancient history, but any indication of higher wage growth hurts.  Jobless Claims data is very timely and anything under 200k suggests full steam ahead for the labor market.

Bonds were already weaker overnight as overseas accounts sold steadily.  From a headline perspective, the higher Eurozone inflation numbers seem like they should have hit bonds harder, but again, the selling trend was very gradual overnight.

The focus now is on how much higher interest rates might go in the US and eurozone, with swaps markets now pricing a peak Fed policy rate of 5.5% in September, and some even betting on 6%. US 10-year yields, the main reference rate for the global cost of capital, rose 40 basis points in February and are consolidating their rise past 4%.

Market is digging deeper into yesterday’s ISM data. The index was in contraction (good for inflation) but the prices paid component was up (bad for inflation).

Plus inflation data out of the Eurozone came in hotter than expected.

Feds Bostic and Kashkari spoke yesterday expressing concerns over strong jobs and inflation. Once again enforcing “more hikes and no cuts this year.”

Even though several other unofficial (JOLTS, ZipRecruiter, etc) measures show softening – Jobless claims came in at -2,000 to190k. Another reading below 200k. Continuing claims fell 5k to 1.7m.

US stocks snapped two days of losses after Federal Reserve Bank of Atlanta President Raphael Bostic said the central bank could be in a position to pause rate hikes sometime this summer. Treasury yields stayed elevated.

Traders ditched their low-conviction moves toward the middle of the trading day, pushing the S&P 500 higher. The Nasdaq 100 also jumped as investors considered Bostic’s comments somewhat dovish. Both indexes shrugged off the losses they suffered earlier after data signaled continued resilience in the

labor market, supporting the case for the Fed to keep raising rates.

In times of great uncertainty, rising interest rates and a rapid decrease in the dollar’s purchasing power, it behooves investors to get their cash back in hand as quickly as possible. This allows one to redeploy the cash into a higher yielding asset in a mad dash to, hopefully, check inflation’s destruction of your capital. For mortgage investors in a time like now, with the aggregate prepayment speeds in both Ginnie Mae and Fannie Mae 30-year mortgages falling to their lowest since Duran Duran was making the girls scream in the early 1980s, one source of relatively faster speeds is the Ginnie Mae II 15-year bonds.

Besides being a nice port from the storm should rates continue to ratchet higher (I expect the 30-year lending rate, for instance, to be over 7% by summer) the Ginnie Mae 15-year mortgage also tends to pay much faster than its conventional brethren.  Via Chris Maloney at BofOK

UWM Holdings reported Wednesday a $62.5 million net loss in the final three months of last year including a $150.8 million decline in the fair value of mortgage servicing rights. But it was still profitable from operations, UWM CEO Mat Ishbia contended. That’s a freefall from the third quarter’s $325.6 million profit and $239.8 million in the fourth quarter of 2021, when the market was still hot.

The company reiterated its claim as the industry’s top lender, boasting of a 54% share of the wholesale market and 11% share of the overall market in the fourth quarter; for the full year, this was 38% and 8%, respectively.

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