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Mortgage News Daily provides comprehensive daily coverage of mortgage rates including our daily rate survey and market commentary. We also cover mortgage backed securities markets, housing news, housing data, etc.

Follow mortgage rates with our daily survey and market commentary. Track MBS and Treasury markets and stay up to date on the latest housing news.

 

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265 Posts
Month-End Selling Keeps Rates Range-Bound
British Gilts rallied 20bps overnight, making the 6-8bp gain in US 10yr yields possible. 10s are now down 5.5bps now and MBS are up a quarter point. 2-way volatility after AM data and now some organic weakness eroding the gains. MBS down more than a quarter from the highs, but roughly unchanged on the day. Now roughly unchanged at 3.778.
Month-End Selling Keeps Rates Range-Bound
PCE Faced a High Bar to Move Markets Today. It Didn't Clear It

Today's calendar may have contained what the Fed refers to as its preferred inflation metric (Core PCE price index), but it was never likely to be a big market mover due to the market's established pattern of trading inflation surprises immediately after the CPI data (which comes out 2 weeks earlier).  As such, it's no surprise to see no reaction to PCE this morning.  In fact, bonds are stronger despite PCE suggesting a sell-off.  The only "yeah but" would be that the curve is more inverted (2yr weaker

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PCE Faced a High Bar to Move Markets Today. It Didn't Clear It
Data Dependent Reality Keeps Bonds in Check

Data Dependent Reality Keeps Bonds in Check

Wednesday's emergency bond buying announcement from the BOE served to cap the death spiral that had been underway in bond yields, but not as an impetus for a sustained push in the other direction.  In other words, it only really made a suggestion about the ceiling of the range in the near term, but not the floor.  For that, markets turned to this morning's inflation data from Germany--another all-time high.  Yields spiked off the 3.72% technical level,

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Data Dependent Reality Keeps Bonds in Check
Bumpy Road Back to Lower Rates
Wednesday's rally offered hope after the BOE stepped in with emergency bond buying. Yields were flat to slightly higher in Asia, but then sharply higher after record inflation readings in Germany's biggest region. The first of these is only in its early stages of becoming visible, but for the first time in a long time, stochastics are starting to inch below oversold territory. The pivot point of 3.714-ish is also emerging as a relevant line. The yellow line would still be a good target to signify a shift. For... more
Bumpy Road Back to Lower Rates
Is Wednesday's Rally Enough to Turn The Tide?
Is Wednesday's Rally Enough to Turn The Tide? 10yr yields began the day with overnight levels easily over 4.00%. It wasn't until the 6am emergency bond buying announcement from the Bank of England that yields began to plummet. While US 10s didn't quite enjoy the 50bp rally seen in British bonds in the first 40 minutes, we did manage to work our way down to a 20bp rally by the afternoon. While this COULD end up lining up with a bigger picture shift, that shift would ultimately need to be confirmed by other events.... more
Is Wednesday's Rally Enough to Turn The Tide?
BOE Bailout Stabilizing Bonds But Raising Questions
The Bank of England announced emergency bond buying (read: inflationary) But at least it pushes back firmly on the supply/demand panic in the British bond market. If it was a more ideal solution, bonds would be back at last Wednesday's levels as opposed to "still significantly weaker. But perhaps the bigger question is whether the action by the BOE serves a symbolic role to draw a line in the sand, or rather, to hang a. to hung a ceiling over the recent high yields. The action is to hang in the air, or instead,... more
BOE Bailout Stabilizing Bonds But Raising Questions
Beware The False Hope in MBS Today
Beware The False Hope in MBS Today MBS ended up with a nice little rally after 2pm that brought prices 3/8ths higher. Treasuries, on the other hand, set new long-term yield highs today. That's not to say 10s are destined to break above 4% and keep rising-simply that the gains in MBS are specific to MBS. Today's video talks more about the outperformance and the broader rate considerations. 10yr still down 6.5bps at 3.864 and MBS up 11 ticks, but down more than a quarter point from the highs. MBS down 5/8ths intraday... more
Beware The False Hope in MBS Today
Jurassic Park: MBS Edition
Today is already at risk of providing an example as an EU bond sell-off in the morning pulled longer term Treasury yields into negative territory. Even if bonds manage to rally back substantially, they'd still be nowhere close to challenging the prevailing uptrend, nor suggesting a shift away from oversold territory. Several have reiterated that, although rates are already in restrictive territory, they will be going higher and staying higher until inflation is convincingly lower and the economic data shows... more
Jurassic Park: MBS Edition
Why do US Rates Suddenly Care About The UK?
Why do US Rates Suddenly Care About The UK? If you're just getting caught up, UK fiscal policy is probably at the center of the last few days of rate volatility. UK market fallout added to US rate drama today, but why is this suddenly a thing? First off, there is almost always some spillover from EU rate momentum to the US. The proportion of the past few days is actually much smaller than normal. The takeaway is that "Higher" remains the path of least resistance for rates until further notice. 10yr up 8bps at... more
Why do US Rates Suddenly Care About The UK?
No Reprieve For Selling Spree Yet, But More Resilience vs EU
After a glimmer of hope at the end of last week, bonds are back to their old tricks. Actually, they only have one trick recently: selling-off at a faster pace than expected. A far more massive sell-off in UK bond markets continues to be a thorn in the side for US bonds. This is one of the only redeeming factors actually: the fact that US bonds are "Only" up 10bps while UK yields are up more than 30. MBS are less impressed as their custom is to underperform amid heightened volatility. Why are we talking about... more
No Reprieve For Selling Spree Yet, But More Resilience vs EU
Let's Talk About Whether It's Time To Talk About Some Resilience
Let's Talk About Whether It's Time To Talk About Some Resilience A large, rapid rate spike is frequently one of the best early indicators for at least some small token of a corrective rally. Even in the early 2022 rate spike, there were several opportunities for passengers to disembark on the way up-5 to 7 days here and there where rates were sideways to slightly lower. In the current case, rates haven't strung together more than 3 days of improvement since July. Treasuries have mostly leveled off since then,... more
Let's Talk About Whether It's Time To Talk About Some Resilience
Hits Keep Coming For Mortgage Market (The Bad Kind)
The positive close on a volatile Fed day offered false hope for rates-a fact that was laid bare with Thursday's massive sell-off. Now on Friday, more false hope as another massive overnight sell-off gave way to a full recovery by 9:20am. Questions remain as to WHY. It's not that we don't understand the market is in the midst of repricing the Fed rate hike outlook based on this week's dot plot, but that alone doesn't seem to justify the pain we've seen. That remained debatable as of yesterday afternoon although... more
Hits Keep Coming For Mortgage Market (The Bad Kind)
Why So Much Selling Today Instead of Yesterday?

Why So Much Selling Today Instead of Yesterday?

Today is one of those interesting and massive selling sprees in the bond market that raises very logical questions.  If we assume that the Fed meeting was/is the reason for the weakness (and that's a safe bet), then why didn't we see the sell-off yesterday?  Sure, we could consider the fact that the rest of the world's financial markets are closed by the time the Fed announcement comes out or that traders may have other reason to wait to fully trade

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Why So Much Selling Today Instead of Yesterday?
Bonds Getting Utterly Smoked
The market made it through yesterday's Fed announcement in deceptively sideways fashion as far as bonds were concerned. It was a confirmation of a hawkish Fed that won't care about the economy until it sees actual damage, and even then, only if that damage coincides with the expected drop in inflation. Perhaps even more important than Powell's message during the press conference was the takeaway from the Fed's dot plot. The dots are the thing! Powell simply didn't say anything in the press conference to suggest... more
Bonds Getting Utterly Smoked
Deceptively Sideways After an Important Fed Day
The long end of the curve rallied on Fed credibility (i.e. higher and higher rates eventually hurt the economy and bring inflation down). MBS were stuck somewhere in between but managed to scrape together a token improvement, albeit one that is meaningless beyond the scope of the past 2 days. Bonds choppy and sideways in Asia, then quickly (but modestly) stronger at the EU open. MBS up an eighth at 97-15 (97.47.47) .
Deceptively Sideways After an Important Fed Day
Here's What Changed in The New Fed Announcement
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures. Russia's war against Ukraine is causing tremendous human and economic hardship. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy. The Committee would be prepared... more
Here's What Changed in The New Fed Announcement
Here's What Matters on Fed Day, Part 2
Sadly, for the market's purposes, it's less about the needless loss of life and more about the impact on commodities prices and supply chains. If markets were ultra concerned about the latter, we likely would have seen oil prices do something other than simply moved back up to yesterday morning's highs. We're market watchers and not a global military strategists, so we don't know what we don't know-only that the market isn't looking too concerned by the latest batch of rhetoric. Rather, the market's primary... more
Here's What Matters on Fed Day, Part 2
Here's What Matters on Fed Day
Here's What Matters on Fed Day Bonds sold off some more today because why not?! 10yr yields were more involved than 2s for a change, ultimately setting new long-term highs of 3.604. 10yr yields up 7.4 bps to 3.569 and MBS down roughly 3/8ths. 10yr up 9bps at 3.583 and 4.5 UMBS down almost 3/8ths at 97-06. 10yr at highs of the day, up more than 10bps trading just under 3.60%. MBS down 14 ticks. 10yr yields now up "Only" 7.9bps at 3.573 after being over 3.60 at the highs. 10yr yields now up only 4.7bps at 3.542... more
Here's What Matters on Fed Day
Just When You Thought Bonds Might Calm Down a Bit...
The overnight session was frustrating exercise in "position-squaring," which is a term we often use as a sort of generic, hifalutin way of saying "that's just the way the ball is bouncing" Today begins with 10yr yields up almost 9bps to new 11-year highs of 3.581 while 2yr yields are up only 3.3bps. A bigger-than-expected rate hike in Sweden wasn't necessarily a key consideration. But it didn't help. The nearness in Sweden was not necessarily a main consideration for global markets, but it didn’t help. In... more
Just When You Thought Bonds Might Calm Down a Bit...
Bond Buyers on Strike Until They Hear From The Fed

Bond Buyers on Strike Until They Hear From The Fed

There were a few way the run up to this week's Fed announcement could have gone.  One of them involved the market realizing that it had sufficiently priced in an unfriendly eventuality and thus leveling off--possibly leading off back in a friendly direction--over the first two days of the week.  The other involves buyers simply refusing to chase yields any lower until they have the certainty they're looking for.  We got the latter.

Sharply

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Bond Buyers on Strike Until They Hear From The Fed
Bonds Taking Defensive Lead-Off to Start Fed Week
"All eyes are on the Fed" this Wednesday as the committee meets to decide whether to hike 75 vs 100bps. The path of least resistance for bonds is to "sell the rumor" of an increasingly hawkish Fed with some hope to be held out for "buying the news" The long end is under enough pressure to hit new long-term highs, but the short end remains under even more pressure. MBS share more in common with those shorter-duration bonds. The result has been bad for the mBS.
Bonds Taking Defensive Lead-Off to Start Fed Week
Traders Hit Snooze Button, With Next Alarm Set For Fed Day
Traders hit the snooze button after the massive post-CPI sell-off, and set their next alarm for next Wednesday's Fed announcement. Consumer Sentiment gave the impression that it helped bonds, but it was just in right place at almost the right time (10 minutes too early to get credit) The day ended up being super sideways despite early volatility. MBS are down 3/8ths on the day. 10yr yields are up 3.5bps at 3.05bps at 2.4.5% at 3 and 10yr bond yields at 3 to 3.4% at3.4 percent.
Traders Hit Snooze Button, With Next Alarm Set For Fed Day
MBS Spreads Are Not Happy
MBS yields a moving target, but there are mathematical models that calculate them. One issue is the inverted yield curve (shorter-term debt is underperforming in general, and mortgages are widely assumed to be much shorter than their typical Treasury benchmarks. The other is volatility (all other things being equal, volatility hurts MBS spreads) The red line (gap between rates and MBS) is volatile but flat. This suggests mortgage lenders hands are fairly well tied. The orange line (between rates and 10yr) is... more
MBS Spreads Are Not Happy
Have Bonds Lost Enough Ground to Imply Some Relief?
Rates are as high as they've been in 14 years and have moved relentlessly higher since August 2nd. Bouncing back a bit after data (mostly thanks to Philly Fed -9.9 vs. +2.8 f'cast) Is it enough weakness to hope for a technical bounce ahead of the Fed? It doesn't make much sense to count on anything until we actually see what the Fed has to say. Methodical, mechanical, linear selling pressure. But it doesn't made much sense. The Fed is not to count. It doesn’t make muchsense.
Have Bonds Lost Enough Ground to Imply Some Relief?
Volatile, Weaker Morning With Lots of Data to Digest
Bonds traded an almost perfectly straight, gradually-sloped line toward higher yields overnight and were even able to mostly ignore moderate volatility in European markets. Today does nothing to change the prevailing uptrend in rates, nor the persistent oversold technicals. On a separate, but far more interesting note, here's one quick example of just how crazy the temporary illiquidity can get in MBS. This isn't important to understand.
Volatile, Weaker Morning With Lots of Data to Digest
Slow and Sideways as Markets Wait For Bigger News
Bonds began the day in moderately weaker territory but rallied back over the next few hours. Still weaker on the day with 10yr yields up 2.9bps and 4.5 UMBS down 3 ticks (0.09) Bonds turned green just after 11am and have picked up a bit more ground since then. Gains leveled off into the PM hours and MBS have been flat since then. Gains levelled off.
Slow and Sideways as Markets Wait For Bigger News
Which MBS Coupon Now?
In mortgage-specific developments, this week's rate spike is raising questions about the UMBS coupon that originators should be watching when it comes to mortgage rate implications. That question raises its own question: do you want to know which coupon is most relevant to outright pricing at any given moment, or do you want to know which coupon's movement will tell you the most about how rates may change intraday? UMBS coupons can accommodate rates between 0.25 and 1.125% higher than that coupon. A 5.0 coupon... more
Which MBS Coupon Now?
Unfortunate, But Logical Reaction to Much Hotter Core Inflation
MBS was down 3/8ths on the day and roughly 3/4ths from the AM highs. As expected, shorter-dated Treasuries got hit the hardest and longer-term bonds outperformed (the 30yr Treasury actually made modest gains) But MBS lost more than half a point very early in the day. Strong 30yr bond auction reinforces and speaks too additional curve inversion (i.e. love for long term rates, while short term rates are shunned. Long-term rates is shunned and is shunning.
Unfortunate, But Logical Reaction to Much Hotter Core Inflation
Bonds Reeling After Inflation Shocker
core CPI surged to 0.6% vs forecasts calling for 0.3% and a previous reading of 0.2%. This is the sort of surge that very few economists predicted (obviously... the median was 0. 3% after all) This is just the classic Fed accommodation trade. In other words, hotter CPI instantly upgraded the odds of higher rate hikes with a small increase to next week's outlook (10bps) and larger increases to the hikes by the end of the year.
Bonds Reeling After Inflation Shocker
Potentially Decent Day Turns Sour After 10yr Treasury Auction
Potentially Decent Day Turns Sour After 10yr Treasury Auction The first day of the new week began innocently enough. It was arguably a strong start with MBS up roughly a quarter of a point from Friday afternoon's lows for much of the morning. It wasn't until the 1pm auction of 10yr Treasury notes that things really began to deteriorate. 10s hit the 3pm CME close up more than 4bps at 3.36 and MBS were down roughly an eighth on the day. 10yr yield down 3.6bps at 3.279. MBS down 2 ticks on the day but nearly a... more
Potentially Decent Day Turns Sour After 10yr Treasury Auction
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