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MBS RECAP: An Epic Tale of Mortgage Rates vs MBS vs Treasuries
Dec 11 2020, 5:58PM

Risks are beginning to mount for the rate outlook--at least in the sense of mortgage rates being relatively impervious to broader bond market weakness.  In other words, if Treasury yields fall, mortgage rates can easily continue lower.  But if yields continue to rise, mortgage rates will be finding it harder and harder to resist the urge to follow.  Today's video breaks it down in gory detail, including the weekly newsletter's coverage of the same topic. 

Econ Data / Events
  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • Core Annual PPI Inflation 1.4 va 1.5 f'cast, 1.1 prev

  • Consumer Sentiment 81.4 vs 76.5 f'cast, 76.9 prev

Market Movement Recap
09:07 AM

European bonds were sharply stronger overnight following Brexit updates, mainly.  US Treasuries pulled along for the ride to a lesser degree with 10yr yields opening 1-2bps lower and UMBS 2-3 ticks (0.06-0.09) higher.  Stocks are down 0.6% from 5pm.  No reaction to econ data this AM.

10:46 AM

930am NYSE open saw Treasuries rally noticeably but modestly.  This is a recurring theme in December (the movement, not necessarily the direction).  After leveling off for a bit, gains have resumed and we're at the best levels of the day.  Limited correlation with other markets (i.e. Treasury-specific move).  10yr down to .875 and 1.5 UMBS almost back to 102.

02:11 PM

Very little to report since the last check.  MBS have continued at the same or better levels as the settlement of December coupons seems to be making it easier for buyers to get involved.  10yr yields are off their best levels, but still stronger on the day.  Vaccine headlines and government funding confirmation have had little-to-no effect.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.0
103-19 : +0-01
Treasuries
10 YR
0.8960 : -0.0120
Pricing as of 12/11/20 5:57PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
4:43PM  :  ALERT ISSUED: Negative Reprice Risk For Some Lenders
9:05AM  :  Bonds Open Stronger on Brexit News--Little Changed Since Then

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Dec 11
0:00 Roll Date - Fannie Mae 30YR, Freddie Mac 30YR
8:30 Core Producer Prices YY (%)* Nov 1.4 1.5 1.1
10:00 Consumer Sentiment Dec 81.4 76.5 76.9

About the Author

Chief Operating Officer, Mortgage News Daily / MBS Live
A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators. ... more

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Mortgage Rates:
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