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MBS RECAP: Sobering Reminder About Rising Rate Trend
Mar 12 2021, 3:36PM

By yesterday afternoon, the bond market had managed to string together several of the most reassuring days of 2021.  10yr yields were close to 1.50% by the end of the day and the next significant ceiling at 1.62% seemed safely overhead.  But only a few hours into the new trading day, 10yr yields surged up to 1.64+, the highest levels in more than year.  Average mortgage rates are close to being able to say the same (highest in 11 months).  Today's rout provides a wake up call as to the nature of the rising rate environment.  

Econ Data / Events
  • Fed MBS Buying 10am, 1130am, 1pm

  • Core Producer Prices (y/y) 2.5 vs 2.6 f'cast, 2.0 prev

Market Movement Recap
08:51 AM

Much weaker overnight with big hits coming at random times for no apparent reason (speaks to embedded bearish momentum, technicals, and positioning).  10yr up almost 7bps to 1.604%.  UMBS 2.5 coupons down a quarter point.

10:35 AM

10yr has broken the 1.62% ceiling, triggering additional stop-loss selling (up and over 1.63%).  UMBS 2.5s were down nearly half a point at their weakest levels, but have recovered a few ticks in the past few minutes.  Either way, not what we were hoping to see this morning on top of earlier weakness we weren't hoping to see today. 

02:48 PM

All of today's damage was done by 10:30am and things have been very flat since the last update.  At this point, whatever happens in the last 2 hours of trading doesn't have any major implications for next week.  10yr is up 10bps at 1.63% and 2.5 UMBS are down more than 3/8ths of a point at 103.

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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More From MND

Mortgage Rates:
  • 30 Yr FRM 3.24%
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  • 15 Yr FRM 2.62%
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  • Jumbo 30 Year Fixed 3.15%
MBS Prices:
  • 30YR FNMA 4.5 107-11 (-0-03)
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  • 30YR FNMA 5.0 109-11 (0-01)
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  • 30YR FNMA 5.5 110-10 (-0-01)
Recent Housing Data:
  • Mortgage Apps 2.79%
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  • Refinance Index 3.16%
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  • Purchase Index 1.82%