Capital market update for May 13, 2024

Insights and Analysis: Mortgage and Real Estate Capital Markets Update with Jeff Rosato, SVP of Capital Markets at Nationwide Mortgage Bankers

I hope everyone enjoyed the weekend! As always, here’s our weekly update on the major bond market indices, Federal Reserve meetings, upcoming economic data releases, and general trends in the bond market.

Last week remained relatively quiet in the markets, with no significant data releases and a moderate volume of lock activity. We observed a total of 75 locks amounting to $32M, slightly lower than previous weeks. However, April’s locked volume witnessed a 13% increase compared to March, totaling 381 units for $162M. As for May, we’re tracking slightly below April’s numbers.

The Freddie Mac average 30-year fixed rate stands at 7.09% as of last Thursday, showing a decrease of 13 basis points from the previous week. Meanwhile, the 10-year Treasury yield closed last week at 4.50% and experienced a slight decline to 4.48% today.

“If inflation shows signs of easing, this week’s data could set a new tone for the market after recent weaker than expected jobs data.”

Upcoming Economic Data Releases

Last week’s data calendar was light, but the upcoming week promises a flurry of important data for market digestion. Key releases include the Producer Price Index (PPI) tomorrow and Consumer Price Index (CPI) on Wednesday, along with retail sales and housing data for the previous month. Additionally, Fed speaking engagements are scheduled throughout the week, with Chairman Powell delivering a speech tomorrow at 10am ET.

Market Outlook

Market sentiment in April leaned towards rate cuts being pushed back to July or September, reflecting better than expected economic data and persistent inflation. Futures markets have significantly reduced bets on rate cuts in 2024 to 50 basis points, down sharply from 150 basis points earlier in the year. However, this week’s fresh inflation data, coupled with weaker than expected jobs data, could potentially shift the narrative and prompt discussions about the first rate cut of the year.

Current Rates

As of today, rates are generally flat compared to Friday’s close, with the 10-year Treasury down slightly by about 2 basis points at 4.48%.

Stay tuned for next week’s updates and insights in our next installment. Wishing you all a fantastic week ahead!

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