Another week of high market volatility ahead

Published Date 9/26/2022

Last Friday, after heavy selling the previous day MBS prices ended unchanged. This morning in early trade the 10 yr. note increased 10 bps to a new high at 3.79%: by 9 am 3.75% +6 bps and MBS prices at 9 am down 66 bps.

The dollar continues to strengthen. Last week to defend the fall of the Japanese yen its central bank intervened in the markets. Today its in England, the pound got hammered and sparked talk that the Bank of England has to do something, the pound now at an all-time low against the dollar. UK gilts sent 10-year yields above 4% for the first time since 2010. Sterling dropped to as low as $1.0350, taking it closer to parity with the dollar. Chancellor Kwasi Kwarteng’s comment on Sunday that there’s “more to come” on tax cuts — prompted calls for aggressive rate hikes from the Bank of England, with some urging emergency action as soon as this week. England in turmoil as the country grapples with a cost-of-living crisis and a recession. The Yuan and yen are both tumbling due to the growing disparity between the hawkish Federal Reserve and dovish policy makers in China and Japan.

Global assets extended their selloff on Monday as fears of faster inflation and global recession continued to rise. An index of global stocks traded near the lowest since 2020, while S&P 500 futures fell 0.8% as of 6:08 a.m. New York time on concern that Federal Reserve rate hikes to combat persistently elevated inflation will hurt the economy.

At 9:30 am the DJIA opened -100, NASDAQ +67, S$P +2. 10 yr. at 9:30 am 3.76% +8 bps. FNMA 5.5 30 yr. coupon -40 bps and -32 bps from 9:30 am Friday.

At 1 pm $43B 2 yr. note auction.

August apartment asking rents nationally fell 0.1% from July, according to a report from property data company CoStar Group. It was the first monthly decline in rent since December 2020, the company said.

This Week’s Economic Calendar:

  • Monday,
  • Tuesday,
  • Wednesday,
  • Thursday,
  • Friday,

Source: TBWS

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