FED: MNI Fed Preview-Oct 2026: No Rush, But Not Done

Mortgage applications continued their decline amid a rise in prevailing mortgage rates, with the MBA composite falling 1.5% in the week to September 18 to a 69-week low going back to May 2025. It's the 3rd consecutive weekly decline for the index.

• The pullback included a 7-week low for purchases (which have fallen in 14 of the last 19 weeks), refinancing applications fell to an 83-week low (going back to February 2025), now down over 60% from the recent high in March.
• Refis are particularly sensitive to mortgage rates and last week the 30Y conforming saw its biggest weekly rise (15bp) since April 2025, blowing through the 7% mark for the first time since the start of 2025 to 7.12% - the highest since May 2024.
• Spreads vs Treasuries/swaps remain relatively contained though have begun to creep up slightly.
• Without a pullback in rates, activity will remain weak and the residential sector will remain subdued.

• RES 4: 1.4248 High 24 and a key resistance 
• RES 3: 1.4175 High Jul 13
• RES 2: 1.4126 76.4% retracement of the Jun 24 - Aug 21 bear leg
• RES 1: 1.4106 High Sep 23
• PRICE: 1.4098 @ 17:06 BST Sep 23
• SUP 1: 1.3927/3732 20-day EMA / Low Aug 21 and the bear trigger
• SUP 2: 1.3715 76.4% retracement of the May 1 - Jun 24 bull cycle
• SUP 3: 1.3672 Low May 12
• SUP 4: 1.3620 Low May 7

USDCAD maintains a firmer tone and the pair continues to appreciate. This reinforces the current short-term bull theme. The pair has traded through resistance at the 50-day EMA, currently at 1.3933. The break signals scope for a stronger retracement of the Jun 24 - Aug 21 bear leg. Sights are on 1.4126, a Fibonacci retracement. Key support has been defined at 1.3732, the Aug 21 low. First support to watch lies at 1.3927, the 20-day EMA.  

Treasury will buy back up to $6B in 20-30Y nominal coupons in its liquidity support operation Thursday at 1:40 to 2:00pm ET.

• This is just the second of the highly-touted upsized long-end buybacks announced in August, following the 10-20Y operation on September 10.
• The 10-20Y op was seen as a bit of a disappointment at the time in that Treasury only bought back $5.19B of the maximum $6B. But offers had averaged $19B for that bucket in the preceding 6 operations, vs $36B for 20-30s; it would be a bigger surprise if Treasury didn't buy back the full amount tomorrow.
• The next long-end operation after tomorrow's is on Oct 1 (again, at least $4B but final amount yet to be announced).