The most defining moment of the big 2019 bond rally was undoubtedly the August 1st tariff announcement and the resulting massive reaction in both yields and volumes.  The 2 weeks that followed represented the market's attempt to price in a scenario where global trade tensions would push the US and other countries toward economic contraction.  With the benefit of hindsight, we can look back to mid-August and observe that bonds have essentially been correcting that initial rally ever since then.  There was an early opportunity to claim the correction was complete in mid September, but we didn't need hindsight to identify that as a head fake.  The past 4-5 weeks, however, have been more serious, with the most troubling developments seen on Thursday and Friday of last week.  That's when yields officially crossed back above the lowest yield from BEFORE August's mega rally (1.94).  With that, the August rally was officially "corrected."  But all of the above assumes that the weaker trend of the past 3 months is merely driven by technical forces (i.e. an attempt to correct the huge August rally simply because it went so far so fast).  Instead, a great case can be made for markets still actively trying to predict the economic implications of real-time developments in trade, geopolitics, central bank policy, etc.  In other words, this move isn't necessarily over simply because it looks like we're bouncing off a ceiling at 1.94.  In fact, it's likely to continue unless trade talks go off the tracks or economic data takes a bigger turn for the worse.  Otherwise, short-term gains run the risk of falling into the "ascending triangle" seen in the chart above (teal lines).   Bottom line: we had been tracking a more neutral triangle/consolidation that implied equal momentum toward higher and lower yields.  The past 2.5 weeks shifted the triangle in a decidedly unfriendly direction, but relative to the Aug/September swings, the trading range is still getting narrower as markets are increasingly able to answer the question of "what next?"  In other words, the next move is still in limbo, but it's a more bearish limbo than it was in mid October.  If we can break well below the lower teal line, maybe our limbo spirit animal will look more bullish.

November 13, 2019 Download our Mobile App: Download our Mobile App: 30 Yr. Fixed 6.29% +0.02%   6.11% 7.26% 15 Yr. Fixed 5.72% +0.02%   5.54% 6.59% 30 Yr. Jumbo 6.25% +0.00%   6.25% 7.45% Compare Mortgage Rates from Local Lenders for Nov 13, 2019 Mortgage Rates Avoid More Pain, Even if Only For Today Tue, Nov 12, 2019 5:00PM Mortgage rates had a bad October . November hasn't exactly been great either, with last Thursday being one of the worst days of the year in terms of day-over-day jumps in rates. In addition to the abrupt move, last week's weakness also brought rates in line with their highest levels in more than 3 months. All of the above could be part of a bigger shift away from the prevailing trend toward lower rates (which had been intact since last November) and into a new trend of rising rates. This newer, unfriendlier trend arguably tried to make an appearance in mid September but was quickly shut down a... (read more) Mortgage News Daily Rate Change Points 30 Yr. Fixed 6.29% +0.02 0.00 15 Yr. Fixed 5.72% +0.02 0.00 30 Yr. FHA 6.00% +0.03 0.00 30 Yr. Jumbo 6.25% 0.00 0.00 7/6 SOFR ARM 5.65% +0.02 0.00 30 Yr. VA 6.01% +0.02 0.00 Updates Daily - Last Update: 9/12 Freddie Mac Rate Change Points 30 Yr. Fixed 6.35% -0.15 0.00 15 Yr. Fixed 5.50% -0.10 0.00 Updates Weekly - Last Update: 9/11 Mortgage Bankers Assoc. 30 Yr. Fixed 6.49% -0.15 0.56 15 Yr. Fixed 5.70% -0.14 0.55 30 Yr. Jumbo 6.44% -0.14 0.48 Updates Weekly - Last Update: 9/10 UMBS 30YR 5.5 101.12 -0.01   97.47 101.61 UMBS 30YR 6.0 102.38 -0.02   99.66 102.50 10 YR Treasury 4.080 +0.013   3.621 4.780 MBS Live Day Ahead: Bonds Fight Back, But This is Still 'Bearish Limbo' Wed, Nov 13, 2019 10:03AM The most defining moment of the big 2019 bond rally was undoubtedly the August 1st tariff announcement and the resulting massive reaction in both yields and volumes.  The 2 weeks that followed represented the market's attempt to price in a scenario where global trade tensions would push the US and other countries toward economic contraction.  Wit... (read more) MBS Price Change UMBS 5.0 99.60 -0.04 UMBS 5.5 101.12 -0.01 UMBS 6.0 102.38 -0.02 GNMA 5.0 99.95 -0.05 GNMA 5.5 101.11 -0.02 GNMA 6.0 101.99 -0.02 Pricing as of: 9/15 4:10AM EST US Treasury Yield Change 2 YR Treasury 3.562 +0.009 5 YR Treasury 3.640 +0.010 7 YR Treasury 3.829 +0.014 10 YR Treasury 4.080 +0.013 30 YR Treasury 4.701 +0.020 Pricing as of: 9/15 4:10AM EST Other News Consumers Shaky Again on Whether it's a Good Time to Buy Wed, Nov 13, 2019 8:26AM Once again the "Good Time to Buy" component of Fannie Mae's Home Purchase Sentiment Index (HPSI) is on the decline. Net positive answers to that question fell by 7 percentage points in October , helping to drag the entire index lower for the second straight month. The HPSI decreased 2.7 points to 88.8 but remains up 3.1 point compared to October 2018. The In... (read more) Access to Conventional/Jumbo Credit Increased in October Wed, Nov 13, 2019 8:35AM Access to government loans continues to decline, but conventional and jumbo loans picked up the slack in October, pushing the Mortgage Credit Availability Index (MCAI) higher. The Mortgage Bankers Association (MBA) said the Index grew by 0.9 percent to 185.1 in October. A decline in the MCAI indicates that lending standards are tightening, while increases in... (read more) Mortgage Applications Hit Recent Highs Wed, Nov 13, 2019 8:07AM The Mortgage Bankers Association (MBA) said application activity during the week ended November 8 was the strongest since late September , with both purchasing and refinancing indices posting gains. MBA's Market Composite Index, a measure of mortgage loan application volume, rose 9.6 percent on a seasonally adjusted basis from the week ended November 1. On a... (read more) Underwriting, Broker, ECOA, Free LPMI Products; Fire AND Flood Updates Wed, Nov 13, 2019 8:57AM I continue to see headlines as I head to balmy Kansas today. There was, “A Court Ruling Makes Mortgages Vanish Into Thin Air.” This is a headline no lender wants to see, but apparently this court decision might change how home loans are valued in the secondary market . As if capital markets personnel don’t have enough to worry about in the ... (read more) Latest Video US-China trade talks hit snag over farm purchases: Wall Street Journal Rates more likely to fall than rise: MacroPolicy Perspectives' Coronado Fed's Jerome Powell: Negative interest rates would not be appropriate for U... Fed's Powell: Debt is growing fast than economy, and that's not sustainable Around the Web Reuters Shares, bond yields slip on sour trade deal sentiment CNBC Bidding wars for homes hit a decade low Reuters Trump says he will make a decision on auto tariffs soon Calculated Risk Blog NY Fed Q3 Report: "Household Debt Continues to Climb in Third Quarter as Mortgage and Auto Loan Originations Grow" Calculated Risk Blog Fed Chair Powell: The Economic Outlook Calculated Risk Blog Houston Real Estate in October: Sales up 6% YoY, Inventory Up 7% Reuters Fed's Powell says 'sustained expansion' likely for U.S. economy CNBC US consumer prices rise 0.4% in October, slightly higher than estimates Redfin National Bidding War Rate Hit a 10-Year Low in October CNBC Powell's communication has been 'erratic,' former Fed official Plosser says CNBC Treasury yields tick higher as investors await economic data, Fed speeches Reuters Fed's election year challenge: Is slowing U.S. job growth a 'material' change? Reuters No tariff adjustments until deal made, Kudlow says: CNBC

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