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How Low Can Rates Eventually Go?
Until further notice, we can expect to see the bond market drift in a fairly consistent range, making modest course course corrections depending on the covid outlook. We can also dig into the nuts and bolts of the mortgage bond market to ask and answer questions about how low rates can eventually go. The answer is actually surprisingly simple.
Econ Data / Events
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Market Movement Recap
08:16 AM Bonds opened the overnight session slightly stronger. Stocks were slightly weaker. No major movement since then, but a slightly stronger bias in bonds in early domestic trading.
11:43 AM Yields found bottom right in line with Friday's lows (.60%) and have been moving higher since roughly 9am. 2.0 UMBS bounced at their Friday highs shortly thereafter and are down about 2 ticks (0.06) since then.
01:20 PM MBS and Treasuries both just turned negative on the day, but not for any particular reason. The only suspect at the scene of the crime was simply the close of the European bond market (it's not uncommon to see tradeflows shift after a major market closes/opens for the day).
02:52 PM After a bit more weakness, both Treasuries and MBS found support. Both are near unchanged despite ongoing strength in stocks.
MBS Commentary
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How Low Can Rates Eventually Go?
Until further notice, we can expect to see the bond market drift in a fairly consistent range, making modest course course corrections depending on the covid outlook. We can a... (read more)
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Mortgage Rate Watch
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Markets continue to focus on coronavirus numbers first and foremost. When the news is good , we tend to see stocks and rates move higher. When the news is bad , rates tend to fall and stocks struggle to improve. The movement is usually more pronounce... (read more)
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Rob Chrisman
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After the shaman finished my taxes last week over the phone, we struck up a conversation about working from home, pros and cons, since it appears that most will be doing this for the remainder of 2020, if not beyond. (But work from home Monday throug... (read more)
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Housing News
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All three measures in the Census Bureaus June residential construction report moved higher , as the building industry continued to recover from its April collapse. However, of the three, only the rate of units completed was higher than its June 2019 ... (read more)
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Housing News
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The interest rates on mortgage loans that closed in June averaged 3.40 percent, down 3 basis points from the average in May according to Ellie Mae's Origination Insight Report. The rate for 30-year conventional loans was 3.42 percent compared to 3.44... (read more)
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Housing News
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There was another decline in forbearance starts this past week and the number of loans in active plans also fell for the third straight week. Black Knight's weekly report on COVID-19 related forbearances reported a total of 4.12 million loans that ha... (read more)
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