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2025-09-17 20:33:14
MBS Basis Pressure Await Fed Decision: ⑴ The market is closely watching the upcoming Federal Open Market Committee (FOMC) monetary policy statement and summary of economic projections, followed by a press conference by Fed Chairman Powell. Ahead of these key events, housing data, Energy Information Administration (EIA) data, and short-term Treasury auctions are also attracting market attention. The Bank of Canada will also announce its interest rate decision, with a 25 basis point cut expected. ⑵ MBA data released earlier in the day showed a significant surge in refinance activity as mortgage rates retreated to near their lowest levels since October of last year. The refinance index surged 57.7% to 1596.7 in the week ending September 12, reaching its highest level since the Fed began raising interest rates in March 2022. The refinance share of total applications rose to 59.8%, the highest level since the week ending January 14, 2022. During the same period, the Composite Market Index rose 29.7% to 386.1, with the Purchase Index edging up 2.9% to 174.0. (3) UK CPI data for August met expectations, with year-on-year and core CPI figures at 3.8% and 3.6%, respectively, unchanged from July. Given this reading is well above the Bank of England's 2% target, no interest rate cut is expected in the near term, including at tomorrow's meeting. (4) Regarding market dynamics, the 10-year US Treasury yield fluctuated between 4.003% and 4.037%, with limited trading volume. Both the 2s10s and 10s30s curves flattened. US stock index futures and major European stock indices were flat. The US dollar index rose slightly by 0.19% to 96.82. The 30-year fixed-rate mortgage-backed security (UMBS30) traded within a range of +/- 4 basis points after tightening by 0.7 and 0.6 basis points.
