Over the weekend China shut down the city of Shenzhen (deemed the Silicon Valley of China) due to an uptick in Covid cases. The city will stay shut down for at least one week, which will further disrupt the supply chain and influence the producer inflation numbers. 

On that note, we will also receive the Producer Price Index Report this week and that headline inflation number is expected to be at 10%. 

However, the biggest story of this week is going to be the 2-day Fed meeting which will end on Wednesday. The market is expecting a 25bps hike in rates, but more importantly we are going to hear from Powell on what their future plans look like. So far, the Fed has been noncommittal in regard to their plans, so the market will be eagerly awaiting that press conference. 

Zillow reported that US inventory for homes sank to 729K home listings in February. That is down 25% from February of 2021, and down a whopping 48% from February 2020. 

*Mortgage Backed Securities were down quite a bit from the weekend and continuing to drop as the morning moves on. Currently down a total of 53bps and 18.92bps since the market opened as of 9:30am this morning. The market is hoping for more clarity from the Fed this week, but in the meantime we are keeping a close eye on the market. As always let me know if you have any questions!