Rates Break Through Important Ceiling

Posted To: Mortgage Rate Watch

Freddie Mac’s weekly mortgage rate survey came out this morning showing the lowest rates in 3 weeks (don’t get excited). This happens due to the survey’s methodology, which unfortunately relies on Monday/Tuesday rates almost exclusively. With lenders closed for business on Monday and with Tuesday legitimately being in line with the lowest rates of the year, Freddie’s headline is perfectly defensible–assuming we’re not talking about yesterday or today. If we are, then things are much worse. After an abrupt increase yesterday, mortgage rates shot higher again today, bringing them even further into the worst territory of the month. In fact, apart from December 14th through 28th, today’s rates are the highest in more than 2 years. Whether this is as dramatic as it sounds depends on your perspective…(read more)

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Rates Break Through Important Ceiling
Rates Break Through Important Ceiling

MBS Day Ahead: Draghi Press Conference and Data Contend With Range Break

Posted To: MBS Commentary

When it comes to defining the recent range, there are several candidates for the upper and lower boundaries. When 10yr yields were under 2.40%, that was the best boundary to watch. A break over 2.40% suggested 2.42% was the next line of defense. And finally, 2.44% serves as the last bastion for 2017's sideways range. We were very close to it by the end of yesterday, and we're currently trading above it as the glut of data and events roll out. In addition to this morning's economic data, markets will perhaps be most keenly focused on the press conference with European Central Bank (ECB) President Mario Draghi. The notion of of ECB tapering is still a hot button for global financial markets and investors are looking for any clues as to how that decision is evolving. MBS Pricing Snapshot…(read more)

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MBS Day Ahead: Draghi Press Conference and Data Contend With Range Break
MBS Day Ahead: Draghi Press Conference and Data Contend With Range Break

MBS RECAP: From Bottom to Top of 2017 Range in One Fell Swoop

Posted To: MBS Commentary

After flirting with a break of the lower end of 2017's sideways range yesterday, bond traders clearly decided " now's not the time. " There's precious little to hang one's hat on when it comes to justifying overnight weakness any other way. That wasn't too big a deal as it left 10yr yields to start the domestic session around 2.36+. Despite a modest amount of weakness after this morning's first round of economic data, yields continued to hold WELL within the recent range–never even breaking into the 2.38's. It wasn't until the afternoon hours that bonds began to slide in a slightly more disconcerting way. EVEN THEN, we were still able to say the range remained and that traders were likely just making some defensive bets ahead of Yellen's 3pm speech…(read more)

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MBS RECAP: From Bottom to Top of 2017 Range in One Fell Swoop
MBS RECAP: From Bottom to Top of 2017 Range in One Fell Swoop

Rates Rise Abruptly to 3-Week Highs

Posted To: Mortgage Rate Watch

Mortgage rates moved sharply higher today , more than erasing yesterday’s improvement. In fact, in one fell swoop, rates essentially moved from the bottom of 2017’s range to the top! There are a few caveats though. First, 2017’s range has been fairly narrow. Beyond that, this is only the 3rd week of the year. As always, the notion of “abruptness” is subjective and relative. In the bigger picture, rates are still in much better shape than late December levels. In the more immediate picture, today’s losses would make for a big adjustment to yesterday’s quotes. In some cases, borrowers might be looking at the next eighth of a percent higher in rate. Several lenders have moved up to quoting top tier 30yr fixed rates of 4.25% whereas 4.125% had been the norm. Loan Originator Perspective The good…(read more)

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Rates Rise Abruptly to 3-Week Highs
Rates Rise Abruptly to 3-Week Highs

MBS Day Ahead: Active Day for Data; Range Remains Intact

Posted To: MBS Commentary

Although yields were able to close at the lowest levels in more than a month yesterday, bonds continued to trade in the same intraday range (roughly 2.30-2.44% in terms of 10yr yields). Today begins with that range being firmly reinforced as yields are well off the lows (currently up to 2.37%) ahead of this morning's economic data. There are several reports on tap throughout the morning. First up is the Consumer Price Index (CPI) for December. With inflation increasingly back in the spotlight after years of living in the shadows, every major inflation-related report is a potential tape bomb. CPI is definitely one of the more significant inflation metrics. The median forecast calls for steady month-over-month core inflation, and a 0.1% increase in year-over-year core inflation. Industrial…(read more)

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MBS Day Ahead: Active Day for Data; Range Remains Intact
MBS Day Ahead: Active Day for Data; Range Remains Intact

MBS RECAP: Best Closing Levels Since Late November

Posted To: MBS Commentary

In some regards, bonds had their best day of the year today. The outright gains weren't quite as big as Jan 5th or 9th, but closing yields were the lowest since Nov 29th! Much of today's bond market positivity owes itself to the 3-day weekend. Specifically, it now looks like much of last week's Thu/Fri weakness was due to traders getting out of the market ahead of the 3-day weekend. Of course that leaves traders to get back into the market today, which was clearly the case based on the 7bp gain in 10yr yields. UK Prime Minister Theresa May's speech was a focal point for overseas markets early this morning . Bonds improved heading into the speech (on the expectation for austere Brexit info) and weakened afterward (May was less austere than expected). Weakness continued through…(read more)

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MBS RECAP: Best Closing Levels Since Late November
MBS RECAP: Best Closing Levels Since Late November

Mortgage Rates Back Near 2-Month Lows

Posted To: Mortgage Rate Watch

Mortgage rates moved lower today , generally recovering the losses seen last Friday. This brings many lenders back in line with the lowest levels since November 17th, although last Wednesday (Jan 11) was slightly better on average. There hasn’t been enough volatility to unseat 4.125% as the most prevalent 30yr fixed “note rate” on top tier scenarios. As such, today’s improvement is limited to “effective rates” (which take closing costs into consideration). Heading into the 3-day weekend last week, we discussed the risk that the recent trend toward lower mortgage rates may have run its course, but that we’d need to wait until today to confirm. Today’s improvements keep hope alive. That’s no guarantee that rates will move lower, but at the very least it leaves borrowers with more options . On…(read more)

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Mortgage Rates Back Near 2-Month Lows
Mortgage Rates Back Near 2-Month Lows

MBS Week Ahead: For Bonds, Still About Stocks and "The Range"

Posted To: MBS Commentary

January continues playing host to the same level of stock/bond correlation that we typically see at the end and beginning of any given year. Beyond calendar considerations, we also see this behavior during times of uncertainty where investors huddle together and make similar, broad moves toward and away from "risk." While the resulting correlation is far from perfect (there are definitely noticeable departures from the trend), it has been strong enough to keep stocks in mind when considering the forces acting on bond markets at the moment– especially on a day to day basis (bigger picture correlations never look as good). And then there's "the range." We've been following a range in 10yr yields between 2.42 and 2.34%. Indeed, those continue to be important technical…(read more)

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MBS Week Ahead: For Bonds, Still About Stocks and "The Range"
MBS Week Ahead: For Bonds, Still About Stocks and "The Range"

MBS RECAP: Much Weaker After Data, but Still in Same Old Range

Posted To: MBS Commentary

Granted, we might wake up next Tuesday (markets are closed Monday) to find that bonds are quickly breaking out of the recent range. But as for this week, the 2.34%-2.42% range in 10yr yields remained intact. There were several solid attempts made to break below 2.34%, but none of them stuck. Technicians are most interested in the 3pm CME close as a marking time for long-term charts, and we were never below 2.34% at 3pm. Then today, rates shot right up to the higher side of the range following this morning's data, effectively putting an exclamation point on the rejection of a 2.34% breakout. At issue was the fact that several inflation metrics were stronger than expected. Retail Sales probably took the lion's share of the blame, with the thought being that traders were prepared for it…(read more)

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MBS RECAP: Much Weaker After Data, but Still in Same Old Range
MBS RECAP: Much Weaker After Data, but Still in Same Old Range

Mortgage Rates End Week at Highs

Posted To: Mortgage Rate Watch

Mortgage rates moved higher today , even after many lenders offered mid-day improvements in the afternoon. Bond markets (which underlie rate movement) reacted negatively to this morning’s economic data. The biggest report of the morning–Retail Sales–was slightly weaker than the median forecast. Typically, this would HELP rates. But some traders were expecting the number to be even weaker compared to the forecast (yes, this is like a forecast of a a forecast). In separate data, several inflation metrics came in stronger than expected. Given the fact that markets are fairly worried that inflation will pick up under the Trump administration, it’s not unfair to expect rates to react when data suggests inflation (or inflation expectations) may already be moving higher. 4.125% is still the most…(read more)

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Mortgage Rates End Week at Highs
Mortgage Rates End Week at Highs