After last week’s big upside move for stock and bond prices and lower yields on Friday … mortgage bonds start the first full trading week of 2023 with gains. 

Check out our MMG Minute: https://share.vidyard.com/watch/3xKEvtScEe4aiNFPik8CNL

The main event of the week is the December CPI report. Consumer prices declined October and November while similar consumer inflation readings across the pond have also declined.  A reading that meets or comes beneath expectations would very likely help bonds continue their winning ways to start the year.

The Treasury will be selling a total of $90B in 3- and 10-year notes and 30-year bonds beginning on Tuesday.  After the recent decline in yields, it will be interesting to see the buying appetite.

As we continue to reiterate - we feel we have seen both peak inflation and the peak in rates. However, prices for most goods and services remain elevated, which means there will be a limit to how low rates can go in the near to intermediate term. AND we should expect continued volatility along the way in response to inflation and other economic readings.

Stocks are showing gains with the S&P at its highest level since December 15 as the market hopes for less aggressive Fed rate hikes and on optimism about China’s borders reopening. Fed Fund Futures are showing a 77% possibility of a 25bp hike at next month’s meeting up from 55% last week.   

Technically, the FNMA 30-year 5.5% coupon has successfully traded above resistance at 101.00, which now becomes support one (S1) with resistance one (R1) now 101.50. The 10-year yield is 3.57%.

Continue to lock where you can amidst high volatility but for start positioning clients for lower rates should we see a softer CPI print. Watch the 10-year yield in a range between yield resistance at 3.90% and yield support at 3.50%.

Have a great week!

Note: All U.S. markets are closed on Monday, January 16 in observance of Martin Luther King jr. Day.

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If you, your team, branch or lender needs a strong financially driven newsletter to send to Partners/Builders - talk to us about our MMG Weekly Newsletter at sales@tabrasa.io

Check out our 2-minute tutorial on the new MMG website: https://share.vidyard.com/watch/W6XzGTTCCbhj5kbbvA1QhE    

If you have other team members that could benefit from having MMG in their corner - please reach out to Patrick Hennessy at patrick@tabrasa.io.  And if you would like for us to talk with your team and help with some insights and answers as to what we are looking at - please contact Patrick as well.

Please enjoy this week’s edition of Tabrasa Top 10.

1.       I can do that, and yes, I can also do that. Home sellers gave concessions to buyers in 41.9% of home sales in Q4 2022, the highest share of any three-month period on record (source: Redfin).

2.       That’s good news. Due to the recent increase, more than 2 million homes across the country no longer require a jumbo loan. This means potential home buyer will have additional available inventory that is covered by a more accessible financing option (source: Zillow). 

3.       And the survey says! Top 5 home buyer must-haves for 2023 - backyards, kitchen islands, mirrored walls, privacy and renovation (source: Zillow/World Property Journal).

4.       It was that time of year. Mortgage applications of all types at the end of December 2022 reached the lowest level since 1996 (source: MBA).

5.       More in my price range. Homebuyer affordability improved in November, with the national median payment applied for by applicants decreasing 1.8% to $1,977 from $2,012 in October (source: MBA’s Purchase Applications Payment Index (PAPI).

6.       As of November, rental prices in nine of the 50 largest metropolitan areas are showing year-over-year declines. That’s up from seven of the 50 largest metros just one month prior (source: Realtor.com).

7.       Seesaw numbers. Total mortgage originations for the three-year period from 2022 through 2024 are forecasted at $2.35 trillion, $1.70 trillion, and $2.11 trillion, respectively (source: Fannie Mae). 

8.       That’s not good for 2023. Economic growth (Gross Domestic Product) for 2023 is negative 0.5%, and in 2024 expect a return to expansion at 2.2% annual growth (source: Fannie Mae).

9.       You don’t say! “Homebuyers are waiting for rates to decrease more significantly, and when they do, a strong job market and a large demographic tailwind of millennial renters will provide support to the purchase market,” (source: Sam Khater, chief economist at Freddie Mac).

10.    Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy - Norman Vincent Peale (source: BrainyQuote).