In the day just passed, bonds did an admirable job shaking off the ill effects of a significantly stronger Philadelphia Fed Manufacturing Business Outlook Survey (aka "Philly Fed").  This report is a solid and fairly consistent market mover.  It beat its forecast by the largest amount since 2009.  Those facts alone are pretty scary for bonds, but there were nuances that helped mitigate the damage (we discussed them in detail yesterday in the Huddle and the Recap).  Chief among these was a speech by San Fran Fed Pres. Williams which markets took as a potential indication of a 50bp rate cut in July.  He's since given an interview saying that wasn't his intention. In the day ahead, nothing really matters because yesterday--and indeed the past several months in general--have shown us that the market's expectations for Fed rate cuts are deeply entrenched.  In other words, it would have taken more than one amazing Philly Fed report to derail the July cut.  Moreover, rate cut expectation movement after the Williams speech wasn't even fully undone by the retraction! With that in mind, just how entrenched are rate cut expectations?  Today's charts show various iterations of 10yr yields compared to July rate cut expectations as well as 2019's rate expectations.  In all cases, the lower the green/orange lines are moving, the lower the market sees the Fed Funds Rate for the time frame in question.  The first 2 charts have relative ranges for the July vs 2019 expectations--that is to say, July's line may appear lower than the 2019 line on the chart, but that doesn't mean the market sees a lower Fed Funds Rate at the end of July.  The y-axis scaling is merely expanded to show the best relative movement.  The 3rd chart uses the same y-axis for the rate cut expectations. Bottom line: at least a 0.25 cut has been a foregone conclusion for weeks and a 0.75 cut has been the most likely outcome for 2019.  Perhaps most importantly, last week's rising rate trend did nothing to challenge either of those probabilities in the bigger picture.  Even in the smaller picture (see July 11th on the first chart), rate expectations never took the same sort of hit seen in 10yr yields.  All of this speaks to some extra underlying bond market resilience until further notice.

July 19, 2019 Download our Mobile App: Download our Mobile App: 30 Yr. Fixed 6.28% -0.01%   6.11% 7.26% 15 Yr. Fixed 5.65% +0.05%   5.54% 6.59% 30 Yr. Jumbo 6.25% +0.00%   6.25% 7.45% Compare Mortgage Rates from Local Lenders for Jul 19, 2019 Mortgage Rates Lowest This Week Despite Stronger Economic Data Thu, Jul 18, 2019 5:37PM Economic data and mortgage rate movement go hand in hand. A stronger economy puts upward pressure on rates. A contracting economy helps rates move lower. While this is far from the only source of inspiration, it's indirectly linked to other major sources of inspiration (like Fed policy). Paradoxically, rates managed to move a bit lower today despite an exceptionally strong economic report. What's up with that? The Philadelphia Federal Reserve district publishes a highly regarded report on the manufacturing outlook each month (dubbed simply "The Philly Fed Survey"). It crushed expectations toda... (read more) Mortgage News Daily Rate Change Points 30 Yr. Fixed 6.28% -0.01 0.00 15 Yr. Fixed 5.65% +0.05 0.00 30 Yr. FHA 5.94% -0.01 0.00 30 Yr. Jumbo 6.25% 0.00 0.00 7/6 SOFR ARM 5.62% +0.03 0.00 30 Yr. VA 5.95% -0.02 0.00 Updates Daily - Last Update: 9/8 Freddie Mac Rate Change Points 30 Yr. Fixed 6.50% -0.06 0.00 15 Yr. Fixed 5.60% -0.09 0.00 Updates Weekly - Last Update: 9/4 Mortgage Bankers Assoc. 30 Yr. Fixed 6.64% -0.05 0.59 15 Yr. Fixed 5.84% -0.19 0.84 30 Yr. Jumbo 6.58% -0.09 0.39 Updates Weekly - Last Update: 9/3 UMBS 30YR 5.5 101.22 -0.06   97.47 101.61 UMBS 30YR 6.0 102.47 -0.07   99.66 102.50 10 YR Treasury 4.065 +0.026   3.621 4.780 MBS Live Day Ahead: Here's How 'Priced-In' Rate Cuts Are Fri, Jul 19, 2019 9:25AM In the day just passed, bonds did an admirable job shaking off the ill effects of a significantly stronger Philadelphia Fed Manufacturing Business Outlook Survey (aka "Philly Fed").  This report is a solid and fairly consistent market mover.  It beat its forecast by the largest amount since 2009.  Those facts alone are pretty scary for bonds, ... (read more) MBS Price Change UMBS 5.0 99.70 -0.08 UMBS 5.5 101.24 -0.04 UMBS 6.0 102.48 -0.06 GNMA 5.0 100.02 -0.05 GNMA 5.5 101.19 +0.00 GNMA 6.0 102.13 -0.05 Pricing as of: 9/9 7:01AM EST US Treasury Yield Change 2 YR Treasury 3.499 +0.011 5 YR Treasury 3.576 +0.014 7 YR Treasury 3.784 +0.016 10 YR Treasury 4.061 +0.022 30 YR Treasury 4.719 +0.029 Pricing as of: 9/9 7:01AM EST Other News CoreLogic Estimates the Loan Volume Enabled by GSE Patch Fri, Jul 19, 2019 12:12PM The so-called GSE Patch for the Consumer Financial Protection Bureau's (CFPB) 2013 Ability-to-Repay (ATR) and Qualified Mortgage (QM) rule (Rule) is scheduled to expire in January 2021 (earlier if the government sponsored enterprises (GSEs) are released from conservatorship.) The Patch created a temporary category under the ATR and QM rule under which loans ... (read more) June Closing Rates Highest in 8 Years Thu, Jul 18, 2019 8:37AM Closing rates for mortgage loans were at the highest level in June since Ellie Mae began collecting the data in 2011. The company, in its June Origination Insight Report , said 76.8 percent of all loans closed , up from a rate of 75.6 percent the previous month. Closing rates on purchase loans hit 78.8 percent while the rate for refinances was 73.4 percent. ... (read more) NAR Reports Sharp Drop in International Home Purchases Thu, Jul 18, 2019 8:24AM There was a huge decline in foreign investment in U.S. real estate during the 12 months ending with the first quarter of 2019. The National Association of Realtors® (NAR) said the reduction was evident in both the purchases of resident (i.e. recent immigrants) and non-resident foreign buyers and explained the drop as the result of slowing global economic... (read more) Credit, Broker, Accounting Products; Events and Training; Cap. Mkts. Dollar Roll Primer Fri, Jul 19, 2019 9:20AM Some people pray for ice cream, and their prayers will be answered as this Sunday is National Ice Cream Day. An MLO prayer? “Dear Lord, just give me one more refi boom. I promise to save my money this time.” At the lender level there is plenty of maneuvering going on. Lenders are busy re-hiring ops staff laid off in the past, setting up contract ... (read more) Latest Video January new home sales drop nearly 7% Bank of America CEO: Loan demand showing consistent growth UK parliament votes on options to delay Brexit January new home sales fall short of expectations, down 6.9 percent Around the Web CNBC Earnings, GDP expected to show sluggish growth as investors await rate cut Calculated Risk Blog Lawler: Early Read on Existing Home Sales in June CNBC Battling flood damage? 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