All Things in Moderation

Vital Statistics:

Stocks are higher this morning despite a stronger-than-expected CPI print. Bonds and MBS are down.

The consumer price index rose 0.4% month-over-month and 3.7% year-over-year, which was a touch above Street expectations. The core rate, which excludes food and energy, rose 0.3% MOM and 4.1% YOY, which was in line with expectations.

“US Core inflation came in line while headline measures were higher than consensus forecasts,” Mohamed El-Erian stated. “Together with relatively low weekly jobless claims of 209,000, the immediate market impact will be some upward pressures on market yields. Analytically, it is a reminder of the challenges of the ‘final mile’ of battling inflation, especially when core service inflation remains high and there is concern about the spillover into core CPI from higher energy prices.”

Shelter was the biggest contributor to the increase, with gasoline close behind. Shelter inflation rose 0.6% MOM and 7.2% YOY, the biggest increase since May. The shelter component presents a problem for the Fed in that prices are being driven by super-low supply, and I don’t see how an additional 25 basis points on the Fed Funds rate can affect that. The only thing that can fix the shelter issue is more homebuilding.

Other big increases in inflation include auto insurance (+18.9%), auto repair (+10%), transportation (+9.1%), and food away from home (+6%).

The labor market remains resilient, with only 209,000 initial unemployment claims. Separately, the United Auto Workers is extending its strike to a Ford truck plant in Kentucky.

The FOMC minutes were released yesterday. “A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted….Participants generally judged that, with the stance of monetary policy in restrictive territory, risks to the achievement of the Committee’s goals had become more two sided….Participants generally noted that it was important to balance the risk of overtightening against the risk of insufficient tightening.”

Bond yields generally worked their way lower after the FOMC minutes. The Fed Funds futures took down their bets on a November tightening to below 10% and while the probability of a tightening by the December meeting remained around 26%.

The minutes mentioned that bank credit was tightening somewhat: Bank credit conditions appeared to tighten somewhat over the intermeeting period, but credit to businesses and households remained generally accessible. Check out the YOY change in bank credit, seems a bit more than just “tightening somewhat.” – first YOY decline since the Great Recession.

One explanation is that everyone over-borrowed when rates were 0% and don’t need to borrow now that rates have increased. Or it could mean that the problems in commercial real estate are beginning to affect the supply of credit.

Home Diversification Corp. enables lenders to offer zero down, no PMI, home diversified mortgages with additional important benefit to homeowners of free home value protection. Like a VA loan for non-veterans, but much better! In addition, Home diversified mortgage credit risk at zero down is 83% lower than traditional 20% down mortgages.

These claims are supported in a published article, co-authored with the leading expert on housing finance. Tremendous value is created when the homeowner diversifies their typically largest and entirely concentrated investment – their homes. We are seeking mortgage companies interested in offering this amazing, entirely differentiated new product. We are also seeking non-QM loan investors to invest in the high-volume ultra low credit risk mortgage collateral.

Please contact Marc Biron at 603-493-3654 if you are interested in learning more about the opportunity, or would like to see the published article.

Earnings season kicks off tomorrow with the big banks reporting. Expect to see continued pressure in the regional banking space. “The acute phase of bank stress is clearly over, but in its wake several challenges have become exacerbated including funding challenges, balance sheet constraints, dampened loan demand, and potential negative credit migration as commercial real estate (CRE)] maturities are dealt with,” Wedbush analyst David Chiaverini wrote in a note. “We expect another underwhelming quarter for banks given the macro backdrop.”

Filed under: Economy | 5 Comments »

Vital Statistics:

Stocks are flattish this morning as the bond market re-opens after a long weekend. Bonds and MBS are up.

We don’t have a ton of data this morning, but we do have a lot of Fed-speak with Raphael Bostic, Neel Kashkari, Christopher Waller and Mary Daly all speaking today.

The weekend terrorist attack by Hamas had a muted impact on the US equity markets and is providing a flight to safety in the bond market. So far, it seems to be having an muted impact on oil prices. While international instability usually causes interest rates to fall, the strong labor market is the biggest factor and will probably remain so, especially after Friday’s big number.

The Mortgage Bankers Association, the National Association of Realtors and the National Association of Homebuilders sent a letter to the Fed, urging them take actions to support housing and the mortgage market. Increased uncertainty about monetary policy have pushed out MBS spreads and increased interest rates.

They point out that shelter accounted for 90% of the increase in consumer prices during the month of July and that the best way to attack housing costs is to help facilitate new home construction.

The consortium urges the Fed to commit to ending rate hikes and to stop letting its MBS portfolio run off until MBS spreads have stabilized. I suspect wide MBS spreads are due more to bond market volatility than to QT. MBS spreads weren’t materially different from historical levels during the era of QE, so I don’t see why QT (which is much smaller in scope) would matter. MBS spreads are being driven by bond market volatility, and I suspect an all-clear signal out of the Fed would go a long way towards stabilizing them.

Small Business Optimism slipped in September, according to the NFIB. This was the 21st consecutive month with the index below the historical average. Inflation and labor shortages were the biggest drivers of the decrease. Small Business owners were increasingly pessimistic about the outlook six months out.

Consumption remains strong as consumers spend on credit, while small business is dealing with a tight labor market: ” They raised labor compensation at record rates to keep workers and fill open positions which are at record high levels. To manage rising labor, energy, and other costs, they raised prices at record high rates and continue to do so, adding to inflation pressures. But they are investing in their firms at historically low rates, primarily because capital spending is financed from the bottom line, and profits have been squeezed by rising input and labor costs and regulatory compliance. Interest rates on their loans have more than doubled and financing is harder to get now.”

Chinese real estate developer Country Garden defaulted on a HK dollar denominated loan. Sales have collapsed, with the first three quarters of 2023 down 44% from the previous period, and September sales down a whopping 81%. The developer has $187 billion in liabilities.

IMO this remains the biggest black swan event in the financial markets. I find it highly unlikely that the world’s second biggest economy could have a Great Depression-esque real estate implosion without any negative credit consequences outside of its country. Western investors and banks will lose money, and that might be the catalyst for the Fed to cry uncle.

Housing sentiment remains dour, according to the Fannie Mae Home Purchase Sentiment Index. “Mortgage rates persistently over 7 percent appear to be deepening the malaise consumers feel about the home purchase market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first. Notably, the share of consumers expressing pessimism about homebuying conditions hit a new survey high in September, with 84% now indicating that it’s a bad time to buy a home.”

Filed under: Economy | 25 Comments »

Vital Statistics:

Global sovereign bond yield continue there relentless march higher, with the 10 year approaching 4.9% in the overnight session. We are seeing a bit of a reprieve this morning after the weak ADP print.

The bond sell-off is global, with the Japanese Government Bond yield breaking through 0.8% and the German Bund touching 3%.

The economy added 89,000 jobs in September, according to the ADP Employment Report. “We are seeing a steepening decline in jobs this month,” said Nela Richardson, chief economist ADP. “Additionally, we are seeing a steady decline in wages in the past 12 months.” Interestingly, we saw a decrease in professional / business services, which saw the biggest increase in job openings in yesterday’s JOLTS report. Pay growth for job stayers decelerated to 5.9% while pay growth for job changers decelerated to 9%.

Mortgage applications fell 6% last week as purchases fell 5.7% and refis fell 6.6%. The applications index hit the lowest level since 1996. “Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week to 7.53 percent – the highest rate since 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result, mortgage applications grounded to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.”

Atlanta Fed President Raphael Bostic sees only one rate cut in 2024. “I am not in a hurry to raise, but I am not in a hurry to reduce either,” Bostic said Tuesday at an event in Atlanta, referring to the US central bank’s benchmark interest rate. “I want us to hold. I think that’s the appropriate thing to do, for a long time.” He has been one of the more dovish Fed Presidents.

A last-minute bipartisan budget agreement was reached over the weekend, which kept the Federal Government and the National Flood Insurance Program (NFIP) operating for another 45 days into mid-November.  While the NFIP has measures which prevent a true lapse in the case of a government shutdown, it is smart for lenders to understand how to address flood insurance in case a shutdown occurs. A lender can place the insurance application in the borrower’s file as proof and move forward with closing. Alternatively, lenders can purchase WYO of Private Flood Insurance. Pinnacle Property Data is a boutique vendor management company that specializes in flood certifications and offers flood certifications from ServiceLink National Flood. They work with many of the largest lenders in the industry to reduce costs on flood certifications and provide unique value add products for free. Pro tip: Have your loan officers get flood insurance requirement data for free and if flood insurance is required, get an instant quote here https://pinnacle.rocketflood.com/ . Now is the time to look at process improvements and efficiencies! Contact us today to see how we can save you money on your flood certification program! 602-561-6791 or sasha@pinnpropdata.com

The services economy expanded in September, albeit at a slower rate, according to the ISM Services Index. There has been a slight pullback in the rate of growth for the services sector, which is attributed to slower rates of growth in the New Orders and Employment indexes. The majority of respondents remain positive about business conditions; moreover, some respondents indicated concern about potential headwinds.” Employment growth decelerated, while pricing was flat on a month-over-month basis.

Filed under: Economy | 22 Comments »

Vital Statistics:

Stocks are lower this morning as rates continue to rise. Bonds and MBS are down.

I think most investors are happy to see September (and Q3 in general) in the rear view mirror. Most asset classes lost money in September, with stocks posting their worst month this year. Bond yields spiked and about the only sector that worked was energy.

The government came up with a deal to prevent a shutdown. The deal funds the government through early November. The deal did not include any spending cuts however it didn’t include any further aid for Ukraine either. Judging by the yield on the 10 year, it wasn’t shutdown fears that were pushing rates higher.

The upcoming week will be dominated by employment data, culminating with the jobs report on Friday. The consensus is that the economy added 160,000 jobs in September, and the unemployment rate ticked down to 3.7%. Average hourly earnings are expected to have risen 4.3% on a year-over-year basis. We also get the ISM reports.

Rithm Capital (parent of NewRez and Caliber) announced the purchase of Specialized Loan Servicing and other assets from Computershare for $720 million. The deal includes about $136 billion in MSRs. “The addition of SLS continues to grow our best-in-class special servicing business and adds more clients and homeowners to the Newrez platform,” said Baron Silverstein, President of Newrez. “It further strengthens our origination and servicing channels, both of which are designed to deliver a customer experience that prioritizes a successful homeownership journey.”

Manufacturing activity contracted in September for the 8th consecutive month, according to the ISM Survey.  “The U.S. manufacturing sector continued its contraction trend but at a slower rate, recording its best performance since November 2022, when the PMI^® also registered 49 percent. Companies are still managing outputs appropriately as order softness continues, but the month-over-month PMI^® improvement in September is a clear positive. Demand eased marginally, with the (1) New Orders Index contracting, though at a slower rate, (2) New Export Orders Index continuing in contraction territory but with a marginal increase, and (3) Backlog of Orders Index declining. The Customers’ Inventories Index reading indicated improved supply chain efficiency, as output improved and customers’ inventories continued to decline. Output and Consumption (measured by the Production and Employment indexes) was positive, with a combined 5.2-percentage point upward impact on the Manufacturing PMI^® calculation. Panelists’ companies improved production compared to August and continued to manage head counts, primarily through attrition and hiring freezes. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth. The Supplier Deliveries Index indicated faster deliveries for the 12th straight month, at a faster rate compared to August, and the Inventories Index remained in contraction territory, but improved month over month. The Prices Index remained in ‘decreasing’ territory, 4.6 percentage points lower than the August reading, signifying a return to price reductions, but energy costs in August and September could possibly affect future material costs. Manufacturing supplier lead times continue to decrease, but at a slow pace.

Filed under: Economy | 26 Comments »

Vital Statistics:

Stocks are higher this morning as we round out September. Bonds and MBS are up after an awful month for the asset class.

It is looking more and more like we might get a government shutdown over the weekend. These things generally are more symbolic than anything because the vast majority of government spending is on autopilot and immune to a shutdown. For most people the only impact is that the Park Service closes down the monuments in DC.

Personal Incomes rose 0.4% MOM in August, according to the BEA. Personal incomes were driven upward by increased compensation and investment income. Personal spending rose 0.4%, which was a big deceleration from the July number of 0.9%.

The PCE Price Index rose 0.4% MOM and 3.5% YOY. If you exclude food and energy the PCE Price Index rose 0.1% MOM and 3.9% YOY. The annual increase in the core PCE was the lowest since June of 2021.

The inflation numbers were a touch below expectations, although we will get plenty of additional data before the November FOMC meeting.

Delinquencies on consumer loans are ticking up. 30-60 day DQs rose to 0.84%, an increase from 0.65% a year ago. We are seeing DQs rise across the board, with credit cards and auto loans leading the way.

Mortgage delinquencies are still near record lows, however. “Overall U.S. mortgage delinquencies remained near a record low in July, with the share of homes entering that status or progressing to later stages either unchanged or lower. Since most borrowers have substantial amounts of home equity, those who have locked in low mortgage rates that do enter later stages of delinquency will most likely not experience foreclosures. And while home equity gains have slowed from their former rapid pace, CoreLogic projects that home price growth will pick up over the next year. Borrowers should continue to build equity over the coming months, even if at a more moderate rate.”

Consumer sentiment decreased in September, according to the University of Michigan Consumer Sentiment Survey. Importantly, inflationary expectations continue to moderate, with year-ahead inflation declining to 3.2% from 3.5% and long-run inflation declining to 2.8%. The long-run rate had been stuck in a 2.9% – 3.1% range ever since the pandemic, so this is a good sign.

We are still above pre-pandemic levels with inflationary expectations. Prior to the pandemic, the two-year average for 2.3% – 3% for the year-ahead number and 2.2% – 2.6% for the long-run number. This is good news, however rising energy prices are going to support the headline number for a while.

Filed under: Economy | 5 Comments »

Vital Statistics:

Stocks are flat this morning on no real news. Bonds and MBS are down again. Jerome Powell will speak after the market closes.

It is looking more and more like we will get some sort of government shutdown soon. The last time we had a government shutdown, the IRS wasn’t sending out tax transcripts, which delayed some closings.

Global sovereign yields are shooting higher this morning, led by the UK, with an 18 basis point pickup. The German Bund yield is up 12 basis points despite a better-than-expected inflation report. Rising energy prices aren’t helping things, and all of this is translating into relentlessly higher Treasury yields and mortgage rates.

Bank earnings in a couple weeks will be interesting to say the least.

Gross Domestic Product rose 2.1% in the second quarter, in the third revision. Consumption was revised downward, while non-residential fixed investment was revised upward. The PCE Price index rose 2.5% in the second quarter, while the PCE Price Index ex-food and energy rose 3.7%. Separately, initial jobless claims fell to 204k.

Chicago Fed President Austan Goolsbee said “The Fed has the chance to achieve something quite rare in the history of central banks — to defeat inflation without tanking the economy.” He went on further to say: “The unwinding of supply shocks, the composition of demand returning to more stable patterns, and Fed credibility are central to why I think it might be possible today to reduce inflation while avoiding a deep recession.”

He also said that he is ready to change the focus of the Fed from “how high” the Fed Funds rate goes to “how long” it stays restrictive. Goolsbee is a voting member.

Pending Home Sales fell 7.1% in August, according to the National Association of Realtors. Year-over-year, transactions are down 18.7%. “Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers,” said Lawrence Yun, NAR chief economist. “Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets…The Federal Reserve must consider the sharply decelerating rent growth in its consideration of future monetary policy. There is no need to raise interest rates. “Moreover, the government shutdown will disrupt some home sales in the short run due to the lack of flood insurance or delays in government-backed mortgage issuance,” said Yun.

How buydowns can help improve the affordability problem.

Filed under: Economy | 8 Comments »

Vital Statistics:

Stocks are higher this morning on stronger-than-expected durable goods orders. Bonds and MBS are flat.

Durable Goods orders rose 0.2% in August based on higher defense spending. If you strip out defense spending, durable goods orders fell 0.7%. July’s numbers were revised downward. Non-defense core capital goods orders (which is a proxy for business capital investment) fell 2.9%.

Minneapolis Fed President Neel Kashkari said that a government shutdown / drawn-out strike with the UAW could act to lower inflation and reduce the need for the Fed to hike further. “If these downside scenarios hit the U.S. economy, we might then have to do less with our monetary policy to bring inflation back down to 2% because the government shutdown or the auto strike may slow the economy for us,” he said in an interview. “I’m not hoping for that, but there’s an interaction there.”

The Senate advanced legislation which could help prevent a government shutdown, however House Speaker Kevin McCarthy is still dealing with members who want increased funding for the border. Another major sticking point is funding for Ukraine.

Generally speaking these government shutdowns are more show than substance. The Park Service will close off some monuments in DC and that will be about it. They usually have little to no economic effect beyond pushing some growth from one quarter to the next.

Mortgage Applications fell 1.3% last week as purchases decreased 2% and refis fell 1%. “Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week. The 30-year fixed mortgage rate increased to 7.41 percent, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34 percent, the highest rate in the history of the jumbo rate series dating back to 2011,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields. Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications. Many homeowners have little incentive to refinance.”

Filed under: Economy | 9 Comments »

Vital Statistics:

Stocks are lower this morning after Chinese developer Evergrande called off talks with creditors and looks set for bankruptcy. Bonds and MBS are down.

The upcoming week has quite a bit of data, with house prices / new home sales on Tuesday, GDP on Thursday, and PCE inflation data on Friday. We will also get some Fed-Speak.

There was an interesting interview in Housing Wire with Doug Duncan, chief economist at Fannie Mae. MBS spreads are a huge topic these days, and he was discussing who will be the marginal buyer to step up and replace the Fed’s buying.

Kim: Spreads in the mortgage space are wide. What are the reasons for that? 

Duncan: There are several reasons for that. If that business flow for a time period helps them cover the variable costs, then it can be effective.

For one thing, no fixed-income investor thinks that mortgage-backed securities with 7% mortgage rates will be there when the Fed finishes the inflation fight. They’re going to cut rates and that will prepay. So you’re having to encourage investors with wider spreads to accept that. 

It’s also the case that the Fed is running its portfolio off because they don’t talk about it much. But somebody has to replace the Fed, and the Fed is not an economic buyer. That is they weren’t buying for risk-return metrics; they were buying to affect the structure of markets. So they are a policy buyer.

They were withdrawing volatility from the market, and they were lowering rates to benefit consumers. When [the Fed] is replaced, it’s likely to be by a private investor who’s going to have yield expectations. They may require wider spreads than the Fed because the Fed is not an economic buyer.

While I believe he is correct in that the new buyer of MBS will require a higher spread than the Fed, which had no such requirements, I think he overstates the effect the Fed’s buying had on MBS spreads in the first place. Take a look at the chart below, which is the 30 year fixed rate mortgage rate minus the 10 year.

This is not exactly MBS spreads, but it is a close enough approximation. The thing that sticks out to me is that MBS spreads in the era of QE are not that much different than they were before the real estate bubble. If the Fed’s massive buying of MBS didn’t make that dramatic of a difference, how is slowly letting the portfolio run off going to do it?

Once the Fed is out of the way with rate hikes, we should see a dramatic drop in bond market volatility as the uncertainty over monetary policy disappears. Since fixed income investors are looking at option-adjusted spreads (OAS), as volatility dries up in the bond market, we should see MBS become more attractive to other credit-risk free assets. Yes, prepays might increase, but rates have to fall a lot to trigger any sort of refi boom.

From 12/31/99 – 12/31/06, the difference between the 10 year and the average 30 year fixed rate mortgage was 1.79%. This was pre-Fed intervention. If spreads return to that level, we would be looking at a 30 year fixed rate mortgage around 6.3%, or 100 basis points lower than here.

Filed under: Economy | 27 Comments »

Vital Statistics:

Stocks are higher as markets digest the Fed’s hawkish language from Wednesday. Bonds and MBS are flat.

The 10 year briefly touched 4.5% in the overnight session, which is the highest level since 2007. A combination of rising oil prices, economic resilience in the US and massive government supply is pushing yields higher.

The Fed Funds futures are still predicting a roughly 40% chance of one more rate hike in 2023, taking to heart Jerome Powell’s language of “proceeding carefully” on rate hikes going forward. The December 2024 Fed Funds futures moved up their forecast by about 25 basis points after the Fed meeting.

December 2024 futures:

The average interest rate on US credit cards is over 22%, according to recent data. About 37% of credit card cap out their interest rate at 29.99%. At those sort of levels, it is easy to get trapped in credit card debt. At some point even with mortgage rates where they are, a cash-out debt consolidation refi could make sense for people.

The US economy experienced stagnation in output at the end of the third quarter according to the S&P Flash PMI. The US economy put up the worst performance since February as demand fell. Pricing pressures remain, largely driven by rising energy prices, while backlog gets worked off. We still aren’t seeing layoffs yet, but as demand flags, that should begin to happen.

“PMI data for September added to concerns regarding the trajectory of demand conditions in the US economy following interest rate hikes and elevated inflation. Although the overall Output Index remained above the 50.0 mark, it was only fractionally so, with a broad stagnation in total activity signalled for the second month running. The service sector lost further momentum, with the contraction in new orders gaining speed.

“Subdued demand did not translate into overall job losses in September as a greater ability to find and retain employees led to a quicker rise in employment growth. That said, the boost to hiring from rising candidate availability may not be sustained amid evidence of burgeoning spare capacity and dwindling backlogs which have previously supported workloads.

“Inflationary pressures remained marked, as costs rose at a faster pace again. Higher fuel costs following recent increases in oil prices, alongside greater wage bills, pushed operating expenses up. Weak demand nonetheless placed a barrier to firms’ ability to pass on
greater costs to clients, with prices charged inflation unchanged on the month.”

Filed under: Economy | 19 Comments »

Vital Statistics:

Stocks are higher as we await the Fed decision at 2:00 pm. Bonds and MBS are up.

Fed-whisperer Nick Timaros of the WSJ discussed what to look for in the Fed decision today. While no increase is expected at this meeting, the big question will be the dot plot for this year and next. Timaros believes it is possible that the dot plot will still predict one more rate hike this year, however fewer members will lean that way.

It is easier for the Fed to signal one more rate hike and fail to deliver than it would be for the Fed to send the all-clear signal and then raise rates. The other big question will be how many rate cuts the dot plot signals for next year. The dot plot from June is below:

The June plot sees one more rate hike this year, and then about 100 basis points in cuts in 2024.

Mortgage Applications rose 5.4% last week as purchases 2% and refis increased 15%. “Mortgage applications increased last week, despite the 30-year fixed mortgage rate edging back up to 7.31 percent – its highest level in four weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications increased for conventional and FHA loans over the week but remained 26 percent lower than the same week a year ago, as homebuyers continue to face higher rates and limited for-sale inventory, which have made purchase conditions more challenging. Refinance applications also increased last week but are still almost 30 percent lower than the same week last year.”

Separately, Joel Kan expects mortgage rates to fall into the 6% range by the end of the year and into the 5% range in 2024. I agree with him and I believe the driver is going to be a decline in interest rate volatility which will positively impact MBS spreads. Below is a chart of the Bank of America / ICE bond market volatility index (MOVE) and you can see it jumped in early 2022 which coincided with the Fed’s liftoff. Uncertainty over Fed policy is a driver of volatility, and volatility is probably the biggest driver of MBS prices as it drives convexity forecasts.

I am accepting ads for this blog if you would like to make an announcement, highlight something your company is offering or want more visibility. I also offer white-label services which give you the ability to use this content for your own daily emails. The blog has over 5,000 followers and an open rate around 50%. Please feel free to reach out to brent@thedailytearsheet.com if you would like to discuss this further.

Filed under: Economy | 25 Comments »