happy family in pajamas during the holidays

Market Snapshot 12.7.22- Bonds Are On Fire Again

Good Wednesday AM, best day of the week,

Dan Rawitch this morning: 😊

Keep the fire department on speed dial because bonds are on fire again!

The ten-year pierced below the 3.5 level. It took 5 tries but when it fell, it fell all the way down to 3.4%, before slightly bouncing back up to 3.45, which is exactly the level I talked about. Now, if we can hold below this level, we will test 3.25%. There is just one bit of news that could derail us and that is PPI, which comes out on Friday. Between now and then we should be in good shape. Keep in mind though, the MBS still needs to retest 101.70, and it needs to break above that level, or we will see a bit of a pullback.

Inventory levels…. Dropping.. see the orange line at the far right.. What happens when rates drop, and velocity truly picks up?

Prices will have to rise to meet demand.

Blurb from the MBA. I must share both sides. The most compelling part is the last line (I put It in bold so it’s not missed)

“We, others, many market participants are forecasting a recession in the United States and many other places around the world,” Fratantoni said. “That puts downward pressure on the rates.”  The housing market is already in recession and has been since midsummer, according to the National Association of Home Builders, which publishes the Housing Market Index with Wells Fargo. “The index has declined for 11 straight months,” said Robert Dietz, chief economist for the homebuilders group. “This is going to be the first calendar year in 11 years where single-family starts,” a measure of new home construction, “will total a smaller volume than the prior year.” He predicts a double-digit decline.  

Where the housing market goes, the broader economy follows. Dietz, Fratantoni and others in the industry expect the nation to tip into recession, a state of economic malaise generally defined as two successive quarters of decline. “The housing market leads the U.S. into recession, and it’s likely to pull it out,” Fratantoni said, with recovery arriving around the middle of next year. 

Please remain safe and stay healthy, make today great!