Rate sheets not likely to change much today, although I’m writing this before the morning data comes out so that could change a little bit. This morning brings the Job Openings and Labor Turnover Survey (JOLTS) and consumer confidence data at 10am. We won’t see any big moves, but it could help pricing improve a little bit or lose a little bit of ground depending on how those come in. Once pricing does come out though, reprice risk on the day is low. We aren’t likely to see any big moves as traders sit back and wait for tomorrow’s Fed fireworks.
Repeating the message I’ve been sending for a while now, I expect rates to move lower this week… maybe as much as a quarter point, but not really more than that. We’d have to see one heckuva weak labor report on Friday, or have Powell turn around during his press conference and just flat out say the Fed was going to start cutting and keep cutting in order to see rates push even lower than that.
I’m going to throw this in my commentary, because I am tired of reading comments in places like the Wall Street Journal from the average buffoon… the Fed is not going to cut or not cut rates because of politics. For those that insist they will (I’m sure this is not you though dear reader), let me point something out… if the Fed was trying to make the current administration look good they would start cutting at this meeting, and they aren’t doing that. In fact, they would likely have started cutting earlier in the year so that the labor market was fire and the economy and stock markets took off, and not worried about the inflation until after the election. Powell has been in for two terms already, and I don’t think he’s worried about who wins to get a third if he even wants it. His legacy, and that of his Fed officials, will be a soft landing after the mess of the pandemic.
For loans closing in less than 15 days, cautiously float. There is always risk that something could go wrong, but that risk is low. No way I’m locking a loan ahead of the Fed meeting this week unless it’s about to close or the ratios are so tight they could blow the loan if they moved… but if that was the case it should never be floating to begin with LOL.
For loans closing in 15-30 days, float. This is the week, to see if rates start to take the next step lower, firmly into the mid-to-high 6’s or even the low 6’s for the chosen few (we’re talking con/con here, of course movie runs a bit lower than that). There is no way I’m locking a loan here until after the Fed meeting, and likely not then either.
For loans closing in 30+ days, float. These loans should not even be considering locking. Seriously, not even a little.
Technicals:
The UMBS 6.0 coupon is at 101.09, +2bps on the day.
The 10yr Treasury yield is at 4.16, just like yesterday.
