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Bonds on The Defensive as Range Breakout Looks More Serious
Last week saw yields break higher after being squeezed by a consolidation pattern inside a wider sideways range. That type of breakout implied a test of the prevailing range ceiling (.72). After a head-fake and recovery last Thursday, the new week begins with yields definitively breaking the .72 ceiling. There are several places to lay blame, but at this point the weaker momentum is its own justification for existence.
Econ Data / Events
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
ISM Non-Manufacturing 57.8 vs 56.3 f'cast, 56.9 prev
Market Movement Recap
08:32 AM 8:20 CME open saw sellers lined up to sell to start the week. Some cite preparations for the week's Treasury supply. Others point to stronger stocks and/or Trump's covid progress. 10yr up 2.32bps at .727 and 2.0 UMBS down 2 ticks (0.06) at 103-13 (103.41).
10:54 AM Things have deteriorated fairly quickly with selling pressure constant since 8:20am. 10yr yields now up almost 5bps to .75% and 2.0 UMBS down 6 ticks (.19) to 103-09 (103.28).
01:29 PM Yields are making a case for a new ceiling at .762% and have been trading under that level for more than an hour now. Cooperation from a sideways stock market isn't hurting. MBS have clawed back half of their losses on the day, now down an eighth of a point after being down as much as a quarter.
03:23 PM 10yr yields at new highs for the day now, up 6bps at .765. MBS have given up most of the gains they'd recovered heading into the afternoon. The move lines up with a push to the highest stock prices of the day with S&P futures up 1.73% versus 5pm Friday.
MBS Commentary
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Bonds on The Defensive as Range Breakout Looks More Serious
Last week saw yields break higher after being squeezed by a consolidation pattern inside a wider sideways range. That type of breakout implied... (read more)
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Rob Chrisman
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Are you sure that the underwriter or processor working from home isn’t working simultaneously, on a different laptop, for another company besides yours? My guess is that it would be exhausting, unethcial, and would never happen. Except an owner... (read more)
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Mortgage Rate Watch
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Mortgage rates were mixed today, depending on the lender. The underlying bond market (which dictates day to day changes in rates) has been more volatile in the past 48 hours compared to the past 4 weeks. Mortgage lenders respond to this volatility in... (read more)
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Housing News
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Contracts for existing home purchases rose for the fourth straight month in August and more than doubled the increase expected by most analysts. The National Association of Realtors® (NAR) says its Pending Home Sales Index (PHSI) rose from 122.1 ... (read more)
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Housing News
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The number of active COVID-19 related forbearance plans grew over the past week according to Black Knight's most recent survey on the subject. The number of mortgages in forbearance rose by 21,000, the first increase in six weeks. Forbearances among ... (read more)
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Housing News
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Construction spending expanded again , with residential construction among the healthier sectors. The U.S. Census Bureau put total August public and private construction spending at a seasonally adjusted annual rate of $1.413 trillion compared to $1.... (read more)
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