October 31st, 2022 - Market Update
Current position: Locking
Stocks and Mortgage Bonds are both lower to start the week.
Apartment List Rental Index
Apartment List released their national rent report, showing that rents fell by 0.7% in October.
They are now up 5.9% year over year, which is a significant moderation year over year from 18% last year... which was the fastest year of rent growth on record. It's still estimated that this year will be the second fastest year of growth.
This Week
On Wednesday, the Fed will hike 75bp, but their comments on future hikes and the Jerome Powell press conference will be important for the markets. We expect the Fed to start laying the groundwork for a 50bp hike on December 14.
It's also jobs week, with the ADP and BLS Jobs Reports due for release on Wednesday and Friday respectively. The market is expecting between 190 - 200k job creations in each report and for the unemployment rate to increase from 3.5% to 3.6%. If the market estimates come to fruition, it shows that things are starting to slow in the labor market.
The rate of hiring is the first to slow in an economic downturn, followed by layoffs. Next week's payroll forecast of 190k would be the slowest since a negative print was seen in December 2020.
Technical Analysis
Locking
Mortgage Bonds have failed to break above the 25-day Moving Average and are being rejected from it. There is a lot of room to the downside before reaching the next floor of support. The 10-year has broken back above 4% and after failing to get under its 25-day Moving Average, is now moving higher.
The technicals are looking negative for price action and would imply that there is room for things to get worse.
Begin the week locking.
Source: MBS Highway
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