Good morning! While we have not seen much of a pullback in the Fed’s asset purchases yet, the minutes from last month’s FOMC meeting made it clear that conversation was on the table. When the Fed snatches up agency MBS without regard to price, it allows lenders to offer lower mortgage rates to borrowers. Given that the housing market is currently suffering from inventory shortage due to building material costs and supply chain issues, the last thing we need is a policy – like huge MBS purchases from the Fed – that stokes buyer demand. Housing is just one are where we have seen a notable increase in prices. Over in autos, used car prices are now at all-time highs, having climbed 48% from a year ago according to the Manheim Used Vehicle Value Index. The current uptick in inflation does not seem like a transitory phenomenon as the Fed suggests!
Over in bonds, the 10yr. T-note is +2/32 to yield 1.59% and the FNMA 30yr. 2.5% is trading at $103-21 to yield just under 1.71% with a +85 spread over the treasury curve. Thanks, and have a productive Monday!
Cherry Picks
10 Year Fixed
15 Year Fixed
20 Year Fixed
30 Year Fixed
Agency CMBS
Agency CMO – 3 Year
Agency CMO – 5 Year
Agency CMO – Long End
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