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It got much worse. Bond yields were up more than 8bps by the open with the 10yr just a hair under 1.47%. It might be hard for traders to avoid ringing the 1.50% bell even if bonds manage to bounce today or in the next few days. The kicker is that the weakness lacks the sort of discrete, obvious headline/data motivations that make for satisfying levels of understanding. It continues to be a move driven by big-picture momentum, short-term stop-loss triggers, technicals, asset manager reallocations, month-end trading, convexity hedging, and other esoteric, behind-the-scenes factors.
From a purely technical perspective, the additional weakness was a risk based on the breakout of the longstanding trend channel last week (yellow lines below). The risk now is that traders will aggressively try to get yields up to 1.50%, not only because it's a nice, round psychological level, but it also fulfills an "opening gap" from Feb 24th, 2020, when the covid rally really kicked into a new and higher gear.
The longer a sell-off lasts and the higher yields go, the more likely it becomes that we see a bounce. The only catch to that assessment is that it only applies in relative terms. In other words, we don't know HOW probable the bounce was/is, only that more weakness increases the odds of strength at some point. The past 2 weeks suggest it's a bad idea to bet too heavily (if at all) on said bounce.
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MBS Commentary
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It got much worse. Bond yields were up more than 8bps by the open with the 10yr just a hair under 1.47%. It might be hard for traders to avoid ringing the 1.50% bell even if bonds manage to bounce today or in the next few days. The ... (read more) |
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Mortgage Rate Watch
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As of today, you'd have to go back to June 2020 to see higher mortgage rates. This is courtesy of an ongoing move in the bond market that has longer-term rates/yields surging higher at the quickest pace since the pandemic began. The broader bond mark... (read more) |
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Housing News
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The volume of mortgage applications for both home purchase and refinancing fell for the third straight time during the week ended February 19. The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of that volume, dropped 1... (read more) |
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Housing News
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January marked the fifth straight month that the National Association of Realtors® (NAR) has reported a decline in its Pending Home Sales Index (PHSI). The index, based on newly signed contracts for the purchase of existing homes, was down 2.8 pe... (read more) |
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Housing News
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New home sales continued the turnaround, started in December, that ended three straight months of slowing sales. The U.S. Census Bureau and Department of Housing and Urban Development said newly constructed homes were sold in January at a seasonally ... (read more) |
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Rob Chrisman
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As hope for a recovery drawing nearer helps push rates higher, Carol K. writes, “I hate it when people ask me what I do for fun because there is no classy way to say, ‘Binge drink.’” The approaching 1003 form mandatory changes... (read more) |
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