Tough Road Ahead?


The next few days could be very bumpy.

There’s a lot to digest.  Firstly, we’re coming off the 2.32 resistance. Next, there’s a ton of data in the next ten days. We can’t forget early month supply pressures. Lastly, we have to process what this will all mean to the Fed when they meet in a few weeks.  The start of the month was OK for bonds.  Spending missed big, income was a little hot.  Prices were largely in line with a headline beat, but flat core.

The market doesn’t love it, but I think in the broader view this doesn’t put the Fed on auto-pilot by itself.  We have a ton more to get through including manu ISM later this morning.  If you recall it was this data point that I used as an indicator for lower rates in Q3 2015 and for higher rates in q3 2016.  This has been a constant thorn in our sides since September.  I’ll be watching this one closely.

Fannie 3’s have now lost a point since Friday, so if you haven’t locked already, you missed it.  I wouldn’t discourage locks here as we have another 50 bps or so we could lose, but we are certainly closer to coin toss range versus the instalock mindset we were in last week.  

Volume is picking up solidly as we head into go time.  Let’s finish the quarter strong Primers!!

-Philip Mancuso

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