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Panic In The Bond Market
It's no mystery that longer-term Treasury yields have been trending higher since August (it's all we can talk about at times) and that mortgage rates have largely been able to ignore that trend. But that blissful ignorance is increasingly hard to maintain--a fact that hits home on days like today. For a variety of reasons, today was a big bad day for Treasuries. As feared, MBS were painfully unable to outperform, and the same can be said of mortgage rates compared to MBS prices. Bottom line: rates rose sharply. Multiple lenders repriced for the worse. This is part of an ongoing, widespread reevaluation of economic and monetary outcomes as told by the bond market. There's no guarantee that things get better before they get worse.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
NY Fed Manufacturing 12.1 vs 6.0 f'cast, 3.5 prev
Market Movement Recap
08:28 AM Bonds sharply weaker overnight, including heavy selling in futures on Monday. Snowball momentum. Global reflation/rotation trade (shifting gears into growth mode. Buy stocks, sell bonds). Strong data in Europe. Bank of Japan reaffirms ETF buying commitment. US stimulus on track to be bigger than expected. Global stocks soaring. 10yr up big to 1.25+. UMBS 2.0 down 30bps+
10:47 AM More weakness after the Fed's regularly scheduled Treasury buying operation showed an ongoing preference for shorter-dated paper (this was a 20-30yr operation and they bought mostly 23-24yr paper). Dealers put bonds on sale immediately thereafter and 10s consequently jumped to the highs of the day, up 6+ bps at 1.27+. MBS aren't too much worse for the wear (compared to this morning), but are nonetheless at their lows with 2.0 coupons down almost 3/8ths.
02:30 PM Bonds have been treading water near their weakest levels since the last update, but MBS lost additional ground just now with 2.0 coupons off by more than half a point. Afternoon hours are often less liquid for MBS and illiquidity can exacerbate strength and weakness alike.
03:58 PM More movement of the clock, more selling of the bonds! 10yr yields cracked 1.30% and 2.0 UMBS fell more than 5/8ths of a point. No new motivations--just ongoing momentum. Widespread negative reprices.
MBS Commentary
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Panic In The Bond Market
It's no mystery that longer-term Treasury yields have been trending higher since August (it's all we can talk about at times) and that mortgage rates have largely been able to ignore ... (read more)
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Rob Chrisman
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Despite the lousy weather in many parts of the nation, and Mardi Gras being cancelled, the year is off to a fine start for lenders, and borrowers benefitting from lower rates. Might there be clouds on the horizon? Sure. Rates are creeping higher, esp... (read more)
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Housing News
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Fannie Mae will implement a new version of its Desktop Underwriter (DU) after the weekend of March 13 . Version 11.0 apply to loan casefiles submitted on or after that date, but casefiles created in the previous version. The changes in this release i... (read more)
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Housing News
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Most of the accommodations that have been allowed lenders and borrowers by the Federal Housing Finance Agency (FHFA) due to the COVID-19 pandemic were modified or extended this past week. FHFA, the regulator and conservator of the GSEs Fannie Mae and... (read more)
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Mortgage Rate Watch
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Mortgage rates haven't been moving much recently, but they've logged enough small victories to make it back to the lower levels seen on February 1st . Depending on the specific scenario and the lender, a quoted rate may or may not be visibly differen... (read more)
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Housing News
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A high percentage of those who told the National Association of Home Builders (NAHB) late last year that they were thinking of buying a home have now turned thought into action. Rose Quint writes in the NAHB Eye on Housing blog that 15 percent of tho... (read more)
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