December 1, 2023 – Rate Commentary

• December 1, 2023
• realestate
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

Rate sheets should be similar to yesterday, and it is unlikely we see much movement on the day making reprice risk low. There will be some ISM manufacturing data that could sway bonds a bit as rate sheets start coming out, but it isn’t something to go nuts worrying about. Fed Chair Jerome Powell will be speaking today… twice actually… but isn’t likely to say anything that will shake things up. Tomorrow starts the Fed blackout period, so this will be the last we hear from a Fed member till the FOMC meeting.

Yes, it really is all about that Fed. Rates have enjoyed a nice move lower since the idea that the Fed is done raising rates has taken hold in the markets. Next week the jobs data, and the following week with CPI inflation and the Fed meeting, could bring even more rate relief if markets continue to believe the Fed will need to cut rates sooner. The idea that the Fed will start cutting in March has gained momentum the last couple of days, compared to the previous forecast that cuts would come in June. Mortgage rates will improve on the speculation of cuts, we don’t have to wait for them to actually happen… that’s why we are seeing improvement now and not next year.

The outlook for lower rates is good, and unless a loan is closing very soon and/or is risk averse I’d suggest floating. After the head fake in early October that was followed by the worst rates yet, we now have seen a clear sign that the worst rates are behind us. Although rates will not just move straight down, and some days we will have worse pricing than others, the overall outlook is that rates will slowly move lower as we head into 2024.

Technicals:

The UMBS 6.0 coupon is at 100.27, about -9bps on the day. 

The 10yr Treasury yield at 4.34.