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Have MBS Finally Reached The Limits of Outperformance vs Treasuries?
Bonds are in the throws of an extended negative momentum move that's been in place throughout October. At times, stimulus-related headlines have accounted for volatility during this move. MBS have been outperforming decisively during this time. That makes it easier for lenders to avoid raising rates nearly as quickly as the broader bond market suggests. But spreads are now at all-time "tights" (maximum MBS outperformance) thus increasing the risk that negative momentum in Treasuries will increasingly translate to MBS.
Econ Data / Events
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Markit PMI Composite 55.5 vs 54.3 prev
Markit Manufacturing PMI 53.3 vs 53.4 f'cast
Markit Services PMI 56.0 vs 54.6 f'cast
Market Movement Recap
08:24 AM Bonds were modestly stronger during Asian market hours, with little by way of discernible reaction to the presidential debate. Decent econ data in Europe pushed back in the other direction, but not enough for 10yr yields to be any higher versus yesterday's highs. We're currently unchanged at .865 and 1 tick (0.03) stronger in 2.0 UMBS.
10:54 AM Both stock prices and bond yields fell immediately following the NYSE open. Stocks are now unchanged (S&P futures vs 5pm y'day) and 10yr yields are down more than 1bp. They were down 2 bps a few moments ago, but they bounced at their overnight lows of .84% (more on the significance in this update). 2.0 UMBS are up 1 tick (0.03) at 102-29 (102.91).
03:45 PM Bonds improved heading into the PM hours as stocks sank. Lots of correlation today. Stocks bounced at 1pm, but bonds managed to hold steady at stronger levels.
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MBS Commentary
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Have MBS Finally Reached The Limits of Outperformance vs Treasuries?
Bonds are in the throws of an extended negative momentum move that's been in place throughout October. At times, stimulus-related hea... (read more) |
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Rob Chrisman
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Let me state for the record that I am not a robot, although I often seem to be asked to check a box on certain websites by… robots. This article , however, sure grabbed my attention, as it was supposedly written by a robot that learned to read... (read more) |
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Housing News
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The contribution made to household wealth by homeownership is underlined in ATTOM Data Solutions' third-quarter U.S. Home Sales Report . The company said that a typical homeowner who sold a home during the quarter had a gain of $85,000 . This was $10... (read more) |
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Housing News
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The number of FHA and VA loans in forbearance rose slightly last week, however, the overall numbers of forborne loans fell nationally by 11,000. Black Knight's weekly survey of the COVID-19 mortgage forbearance measures found that, as of October 20, ... (read more) |
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Mortgage Rate Watch
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Thursdays are special days for mortgage rate aficionados--or they can be anyway. That's when the weekly mortgage rate survey from Freddie Mac is released. The survey is a mainstay of the mortgage industry and the news media. It's been around the long... (read more) |
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Housing News
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Existing home sales rose again in September and are now blowing the doors off last year's numbers. The National Association of Realtors® says sales of single-family homes, townhomes, condominiums, and co-ops, rose 9.4 percent from August to a sea... (read more) |
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