Morning! This is MF Lending - the fool-proof way to serve up mortgage and real estate market knowledge without any of the guesswork. So you’ll look like the smartest agent in the room (and you are!)

Here’s what we’ve got for you today:

1. Retail Sales Report Slams Bond Market 🤑

2. Jerome Powell speech today could be the stake in the ground 📽️

3. Weekly Jobless Claims Report 📝

By the way, this article on Why the Fed may be done hiking rates is the most clicked link in this newsletter, you should check it out if you are interested.

Was this email forwarded to you? Subscribe to get it directly!

Rates Today 📈

Retail Sales Report Slams Bond Market 🤑

Tuesday morning, the retail sales report was released for the month of September. This tracks consumer purchases of durable and non-durable goods throughout the month as a percentage of overall consumer spend.

The report reveals to analysts and investors the health of the economy and any inflationary pressures that may exist due to consumer spending.

Here were the highlights:

Summary - this report indicates that the economy is still very hot.

Wall St expected this spend to come down month-over-month, forecasting a fall of 50%.

Instead, the September numbers actually shows that consumer spending increased. YahooFinance puts it best - “consumer slowdown is nowhere in sight”.

The worst part - we are not talking about consumer spending on things people need like housing, groceries, or student loan debt. We are talking about retail sales. This is shit people do not even need, and the American consumer refuses to slowdown their spend.

Look at the bottom line figure above - 0.6 of the 0.7 in consumer spend excluded cars, gas, and building materials 🤯.

-

This was really bad news for mortgage rates - and the bond market responded extremely negative. On Tuesday morning, the bond market was down between 60-70bps.

That means rates were .25%-.375% higher in rate than they were at the beginning of the prior week.

Jerome Powell speech today could be the stake in the ground 📽️

Today at 11am CST, Jerome Powell will be giving a speech discussing the Fed rates and his economic outlook.

Over the last week, many Fed members have given speeches with this narrative: “the bond market has been doing the work for us.”

JPow will be getting on the mic today. If he echoes this sentiment, as Kevin Simpson puts it in the video below: “This could signal the unofficial end to the rate hike cycle”

Since Monday, the bond market has dropped nearly 100bps, a massive swing in rates for borrowers who are looking for preapprovals or shopping for homes, and driving 30-yr rates close to 8.0%.

A volatile morning is brewing. If you want to stay updated, you can follow my Instagram @mf.lending and I will be giving updates throughout the day.

Weekly Jobless Claims Report 📝

As we know, the jobs market is one of the key factors the Fed looks at when determining their policy decisions.

If the jobs market stays tight and unemployment stays low, there is more incentive for the Fed to raise rates…which is not what we want.

Today, the weekly jobless claims came in, once again, below forecasts. The lowest weekly level since Jan 21st, according to NBC News.

Thankfully, the report was not all bad news.

The jobs report also showed that “Continued Jobless Claims” came in above forecasts. This indicates that while fewer than expected lost their jobs, more unemployed people are not finding jobs. A hint to investors that the jobs market may be weakening.

With the mixed bag of data in this report, the market stayed relatively flat this morning after the bond market was hammered all week.

Mark your GCal 📆

1. JPow Speech - Thursday 11AM

Thanks for reading - that is all we have for today 😎

Please forward this to your friends and colleagues if you found it valuable.

— Michael F DiLucchio