Hawkish Read on Warsh Prompts Heavy Selling
Jackson Hole speeches are hit and miss when it comes to bond market volatility. Today's Warsh speech was something of a direct hit--more than enough to sink the battleship of anyone hoping for lower rates to end the week. Warsh's hawkishness was limited to tough talk on inflation and an upbeat assessment of the economy. It wasn't terribly different from the late July press conference, but the market viewed it as upgrading the chance of a rate hike before the end of 2026. 2yr Treasury yields (more sensitive to Fed rate expectations than the 10yr) rose more than 12bps by the close. MBS shed 3/8ths of a point and mortgage rates crested 3 week highs.
Market Movement Recap
09:04 AM Sideways to slightly weaker. MBS down 1 tick (.03) and 10yr up 1bp at 4.68
10:18 AM MBS down a quick eighth after Warsh speech and 10yr up 1.5bps at 4.686 (2yr up almost 7bps).
01:13 PM MBS down nearly 3/8ths and 10yr up 5.4bps at 4.724
Mortgage Rates Jump to 3-Week Highs After Jackson Hole Speech
Jackson Hole is a place in Wyoming, but it’s also shorthand for an annual event where various central bankers get together and talk about monetary policy. The Fed Chair almost always delivers a speech and that speech occasionally causes volatility in t…