http://www.mortgagenewsdaily.com/topic/mbs Mortgage Rates Blog https://www.mortgagenewsdaily.com/markets/mbs-morning-07212026 Tue, 21 Jul 2026 13:26:52 GMT 6a5f82a4a6791958c556a3e2 Matthew Graham While last week's CPI and PPI reports were unabashedly great news, the bond market spent Friday and yesterday gradually unwinding most of the resulting gains. The least complicated way to approach this phenomenon would be to observe that fuel prices spent the same 2 days breaking to the highest levels since May 19th and they continue to hold near those highs today. Even without that fuel price rally, we were already skeptical that June inflation data was a durable justification for lower yields in light of the resurgence of the Iran war in July and the associated resurgence of inflation risks. As we discussed last week in the "crack spread" article, the x factor here is the fact that consumer fuel prices are doing much worse than oil prices suggest. A chart of 10yr yields vs gasoline futures makes this clear.  In this context, bonds are actually a bit stronger than the May 19th correlation suggested. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07202026 Mon, 20 Jul 2026 19:53:58 GMT 6a5e8b60a6791958c554f048 Matthew Graham New Week. Same Old Story While we certainly CAN put short term market movement under a microscope and entertain various potential sources of motivation, it's just as good to take a few giant steps back and observe the bigger picture trend. When we do, we see a decisively weaker trend since October 2025 with additional volatility and selling pressure after the start of the Iran war. Unsurprisingly resurgence of hostilities has put upward pressure on both fuel prices and bond yields. This is definitely one of those "under the microscope" market movers at the start of the week. There were also some tradeflow considerations regardless of news headlines. This was seen in the form of both stocks and bonds noticeably shifting just after 9:30am. Until that point, stocks were improving and bonds were doing a decent job holding sideways. Afterward, both lost ground. Market Movement Recap 09:17 AM modestly weaker overnight. MBS down 1 tick (.03) and 10yr up 2.1bps at 4.567 11:41 AM MBS down 7 ticks (.22) and 10yr up 4.7bps at 4.593 02:49 PM MBS down 7 ticks (.22) and 10yr up 5.2bps at 4.597 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07202026 Mon, 20 Jul 2026 14:12:03 GMT 6a5e3bb0a6791958c5545314 Matthew Graham You've seen the "good vibes only" t-shirt perhaps? Bond traders left theirs at home this morning. That's unfortunate as there isn't much beyond vibes to set the tone this week. Over the weekend, bad vibes came courtesy of another round of escalation in the Iran war. Additionally, the safe-haven buying that helped bonds on Friday has reversed course somewhat as stocks find their footing. At 7:30am, news of a proposed 10-day ceasefire caused yields and fuel prices to drop quickly but not excessively.  30 minutes later, the move was reversed after Houthis declared a naval blockade against Saudi Arabia. 10yr yields are starting out several bps higher and MBS are down about an eighth. On the bright side, there's still quite a bit of room for yields to find a supportive ceiling between current levels and recent highs. And if we instead use the gloomier approach via the 9 month uptrend in yields, there's even more room to rally back toward the lower end of this trend channel. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07172026 Fri, 17 Jul 2026 20:35:46 GMT 6a5aa040a6791958c54fa690 Matthew Graham Roughly Unchanged After Gradual Weakness Bonds ended the day roughly unchanged despite this morning's stronger start. With the S&P falling back to the lows of the day, we can't really blame asset allocation trading between stocks and bonds. It's easier to blame a mid-day surge in fuel prices (especially after 11am) which may have been related to headlines regarding U.S. missiles striking an oil tanker docked at Kharg Island. All told, it was still a victorious week with yields ending up slightly lower than last Friday. The week ahead is marked by limited data and the pre-FOMC blackout period. Bonds will remain tuned into oil price volatility and potentially to any big swings in stocks. Econ Data / Events Building Permits (Jun) 1.367M vs 1.40M f'cast, 1.41M prev Housing starts number mm (Jun) 1.427M vs 1.31M f'cast, 1.177M prev Import prices mm (Jun) 0.3% vs -0.7% f'cast, 1.9% prev Market Movement Recap 08:46 AM Modestly stronger start despite higher oil/gas. 10yr down 1.9bps at 4.536 and MBS up 1 tick (.03). 12:47 PM Near weakest levels. MBS unchanged and 10yr down 1bp at 4.546 04:12 PM At the weakest levels. MBS down 1 tick (.03) and 10yr down 0.4bps at 4.551 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07172026 Fri, 17 Jul 2026 13:35:46 GMT 6a5a3dd0a6791958c54ee5d5 Matthew Graham In a month where bonds have made a visible reconnection with fuel prices thanks to the Iran war resurgence, there have been several notable departures in the correlation. Today is the latest example. If we're splitting hairs, we can still observe yields and fuel prices generally moving in the same direction overnight, but when fuel prices surged between 4am and 9am, bonds didn't really follow. One of the only ways to reconcile that phenomenon is via the fairly brisk selling in equities.  S&P futures have repeatedly bumped into resistance around 7630. Thursday was the latest failure to break that ceiling. Tech-focused stocks are doing even worse and are set to open below their multi-month consolidation/pennant formation. Investors are clearly thinking about capital preservation in the short term rather than buying dips in the stock market. This could all turn on a dime, of course, but until it does, bonds are picking up some of the scraps. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07162026 Thu, 16 Jul 2026 20:46:24 GMT 6a595244a6791958c54d4805 Matthew Graham Ultimately Uneventful Despite Modest Weakness Bonds lost ground modestly today with the ultimate damage being roughly an eighth of a point for MBS and less than a bp for 10yr yields. The selling was led by the short end of the curve (i.e. 2yr yields were up 1.5bps). There wasn't any obvious catalyst apart from an ongoing surge in fuel prices. Perhaps most notably, fuel futures peaked at the same time as bond yields and both declined together after that. We're also not bothered by the short end leading the selling considering how resoundingly it led the rally over the past 2 days. Bottom line: this feels like incidental consolidation after a solid 2-day rally and not something that's indicative of new momentum.  Econ Data / Events Jobless Claims (Jul)/11 208K vs 217K f'cast, 215K prev Philly Fed Business Index (Jul) 41.4 vs 13 f'cast, 10.3 prev Philly Fed Prices Paid (Jul) 53.90 vs -- f'cast, 53.20 prev Retail Sales (Jun) 0.2% vs 0.2% f'cast, 0.9% prev Retail Sales Control Group MoM (Jun) 0.5% vs 0.5% f'cast, 0.7% prev Market Movement Recap 08:31 AM weaker overnight and no reaction to econ data. MBS down more than an eighth and 10yr up 3.5bps at 4.586 11:37 AM Strongest levels. MBS down only an eight and 10yr up 2.2bps at 4.572 02:00 PM MBS down 3 ticks (.09) and 10yr up 1.6bps at 4.566 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07162026 Thu, 16 Jul 2026 15:26:48 GMT 6a590744a6791958c54cb3be Matthew Graham The term "crack spread" is quickly becoming mainstream--especially over the past few weeks. It's more of a concept than a specific metric, but it most frequently refers to the margin between input and output costs for fuel (gas, diesel, etc). Petro-nerds seem to like the 3-2-1 crack spread, which covers both gas and diesel (3 barrels of oil margin vs 2 barrels of gas and 1 barrel of diesel). While it's true that we could simply look at RBOB or ULSD futures to gauge price changes at the pump, crack spreads speak to the current state of supply/demand imbalance. They suggest conditions remain tight for fuel prices. A widening crack spread suggests the move in gas prices is being reinforced by refined-product fundamentals rather than merely reflecting a change in crude oil. Notably, crack spreads have correlated with bonds better than individual fuel metrics when we examine large, long-term shifts in fuel prices. But in the medium term, fuel futures (like gas/diesel... not crude oil) are still probably even more relevant. Either way, looming fuel cost implications are weighing on bonds. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07152026 Wed, 15 Jul 2026 19:43:21 GMT 6a57f188a6791958c54ac6d1 Matthew Graham Wednesday's Gains Had More Staying Power Than Tuesday's Both Tuesday's CPI and Wednesday's PPI came in much lower than expected. Both resulted in fairly big bond rallies. Whereas Tuesday's rally faded gradually after the initial pop, Wednesday's rally continued at a moderate pace as the day progressed. The only trade off was that the initial pop was a bit smaller. The net effect is that yields fell to the same levels seen in the few minutes following Tuesday's CPI. In that sense, the rally implies clear resistance at a 10yr yield level of 4.54%. From a strategic standpoint, rate watchers must consider that the data driving the rally benefited from June's lower fuel prices and that this dynamic has shifted back toward higher prices in July. With that in mind, the bond market's willingness to rally is actually rather impressive. Econ Data / Events Core PPI m/m (Jun) 0.2 vs 0.3 f'cast, 0.1 prev Core PPI y/y (Jun) 4.7 vs 5.2 f'cast, 4.6 prev PPI m/m (Jun) -0.3 vs 0.0 f'cast, 1.1 prev PPI y/y (Jun) 5.5 vs 6.2 f'cast, 6.0 prev Market Movement Recap 08:43 AM Weaker to open but stronger after PPI data. MBS up 3 ticks (.09) and 10yr down 1.4bps at 4.574 11:57 AM MBS up 7 ticks (.22) and 10yr down 3.7bps at 4.552 01:36 PM Roughly unchanged vs previous update.  10yr a bit lower now (4.1bps) at 4.548 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07152026 Wed, 15 Jul 2026 13:20:53 GMT 6a57974ca6791958c54a1404 Matthew Graham The Producer Price Index (PPI) is not normally a huge market mover, but it has its moments of moderate impact. Today is such a moment as PPI did its best to mimic yesterday's sharply lower CPI. There were also big revisions to previous months which brought annual PPI a full 1.0% lower from last month's initial reading (5.5% today vs a 6.0 previous reading, revised from 6.5% when initially reported). Fuel prices loom large in this data, as evidenced by Core monthly PPI at 0.2 vs 0.3. Unlike yesterday, most of today's shift was seen in revisions to previous months--especially May (headline revised from 1.1 to 0.6). Laundry list of little numbers aside, bonds like it. Fed Funds Futures improved. Treasuries and MBS have gone from modestly weaker to moderately stronger after the report. As with yesterday, expect shorter term yields to improve more, and be cognizant of the risk that a breakout in oil prices could give bonds second thoughts about the AM rally.  Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07142026 Tue, 14 Jul 2026 20:42:16 GMT 6a56ae18a6791958c5487402 Matthew Graham Why Were 10yr Yields Only a Few bps Lower Today? If you missed this morning's commentary, the gist is that inflation for June (via the CPI report) came in much lower than forecast (biggest "miss" in over a year). Given the market's preoccupation with inflation, this logically resulted in an immediate bond rally. 10yr yields only ended up a few bps lower by the end of the day. There are 3 key reasons. The first is purely mechanical and it has to do with the shorter-term rates benefitting the most. Fed Funds Futures did the best with the end-of-year implied rate falling an eighth of a point (or one half of a rate hike erased). It's common to see longer term bonds lag these moves with direct Fed rate implications. That said, we would have expected short term rates to do better as well were it not for the fact that fuel prices bottomed in June (when this data was collected) and have since been moving back up fairly quickly. The 3rd reason is related but more timely: fuel prices fell with bond yields into the 11am hour, but erased those gains after that.  Econ Data / Events m/m CORE CPI (Jun) 0.0% vs 0.2% f'cast, 0.2% prev m/m Headline CPI (Jun) -0.4% vs -0.1% f'cast, 0.5% prev y/y CORE CPI (Jun) 2.6% vs 2.8% f'cast, 2.9% prev y/y Headline CPI (Jun) 3.5% vs 3.8% f'cast, 4.2% prev Market Movement Recap 08:32 AM stronger after CPI.  10yr down 7.6bps at 4.541.  MBS TBD, but should be up more than a quarter point soon when they catch up 11:53 AM off the strongest levels on a combination of war headlines and Warsh inflation commitments. MBS up 11 ticks (.34) and 10yr down 2.9bps at 4.587 01:53 PM MBS up 3/8ths and 10yr down 3.4bps at 4.581 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs