MBS and stock markets experience early ups and downs, with overnight bond gains in Asia and Europe. Despite Retail Sales news not meeting forecasts, internal components were positive, with nonstore retailers seeing a rise of 1.2%. Homebuilder sentiment improved, while lumber prices decreased. Fed futures show a 77% chance of a June rate hike, with a potential increase in mortgage rates if sentiment shifts towards higher Fed rates. The median time from Fed’s last rate hike to first cut is four months, with the shortest gap being one month and the longest being 20 months. During the three worst recessions since the depression, cuts came after two months, one month, and 15 months, respectively.

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