The market reaction to coronavirus made a mess of the relationship between Treasuries and MBS (and between MBS and mortgage rates for that matter).  These disconnections can happen from time to time and when they do, we stop following trends in Treasuries and focus on MBS.  In fact, the disconnection between MBS and mortgage rates forced me to stop following MBS except inasmuch to be on the lookout for a reconnection. While we may see a bit of small scale disconnection between Treasuries and MBS in the short-term, it won't be big enough to suggest we tune-out Treasuries again.  The time has clearly come to get back to the business of following Treasuries, even though our focus is on mortgage rates.  If you haven't read my primer on this before, here's why we do that. And if you prefer an entire primer in one chart (mostly), here you go: The blue line is the MBS current coupon yield (left axis) and yellow is 10yr yield.  It's hard to see the most recent disconnection, so let's zoom in. To be clear, we're not concerned about the gap between the lines most recently.  The y-axis doesn't matter.  The lines will adjust depending on the time frame being viewed.  The correlation is what matters.  For instance, if we zoom in even more (keeping the same visual distance between highs and lows on the chart), the gap disappears and the correlation becomes even more noticeable. All that to say, again, it's clearly time to start paying attention to Treasury trends again.  So what do those trends suggest?  Simply put, we're still in the uptrend we've been following, but yields have shown more and more resilience--perhaps even an inkling of bullishness that hints at a friendly breakout. The caution here is that this would be a very weak reversal.  The stochastic at the bottom of the chart would need to be reversing well above the oversold line in order for the signal to be stronger.  As it stands, this is only slightly more promising than neutral/incidental.  But it's better than a sharp stick in the eye!

May 28, 2020 Download our Mobile App: Download our Mobile App: 30 Yr. Fixed 6.28% -0.05%   6.13% 7.26% 15 Yr. Fixed 5.81% -0.04%   5.6% 6.59% 30 Yr. Jumbo 6.30% +0.00%   6.1% 7.45% Compare Mortgage Rates from Local Lenders for May 28, 2020 Mortgage Rates Have Already Risen From All-Time Lows (But Only Slightly) Thu, May 28, 2020 4:38PM It's Thursday, and thus time once again for Freddie Mac's weekly mortgage rate survey. This is the longest-running and most widely-cited snapshot of mortgage rates in the US, but it frequently results in misinformation for mortgage shoppers . The survey does an accurate job of capturing the rates available early in any given week, but it doesn't take the entire week into consideration. As such, actual rates can be very different by the time the survey is published (and news organizations are citing it as a breaking story). This is most noticeable when rates make huge moves late in any given we... (read more) Mortgage News Daily Rate Change Points 30 Yr. Fixed 6.28% -0.05 0.00 15 Yr. Fixed 5.81% -0.04 0.00 30 Yr. FHA 6.01% -0.04 0.00 30 Yr. Jumbo 6.30% 0.00 0.00 7/6 SOFR ARM 5.89% -0.06 0.00 30 Yr. VA 6.03% -0.04 0.00 Updates Daily - Last Update: 10/31 Freddie Mac Rate Change Points 30 Yr. Fixed 6.17% -0.02 0.00 15 Yr. Fixed 5.41% -0.03 0.00 Updates Weekly - Last Update: 10/30 Mortgage Bankers Assoc. 30 Yr. Fixed 6.30% -0.07 0.58 15 Yr. Fixed 5.67% -0.07 0.61 30 Yr. Jumbo 6.38% -0.01 0.34 Updates Weekly - Last Update: 10/29 UMBS 30YR 5.0 99.52 -0.04   95.05 100.11 UMBS 30YR 5.5 101.03 -0.03   97.47 101.40 10 YR Treasury 4.089 +0.014   3.932 4.780 MBS Live Day Ahead: Why We're Watching Treasuries Thu, May 28, 2020 9:14AM The market reaction to coronavirus made a mess of the relationship between Treasuries and MBS (and between MBS and mortgage rates for that matter).  These disconnections can happen from time to time and when they do, we stop following trends in Treasuries and focus on MBS.  In fact, the disconnection between MBS and mortgage rates forced me to sto... (read more) MBS Price Change UMBS 4.5 97.48 -0.08 UMBS 5.0 99.52 -0.05 UMBS 5.5 101.02 -0.03 GNMA 4.5 97.60 -0.05 GNMA 5.0 99.66 -0.07 GNMA 5.5 100.79 -0.02 Pricing as of: 11/3 8:33AM EST US Treasury Yield Change 2 YR Treasury 3.584 +0.010 5 YR Treasury 3.698 +0.015 7 YR Treasury 3.884 +0.010 10 YR Treasury 4.090 +0.015 30 YR Treasury 4.668 +0.015 Pricing as of: 11/3 8:33AM EST Other News Pending Sales Rout May Signal a Bounce for Housing - Realtors Thu, May 28, 2020 10:46AM Pending home sales cratered again in April, marking two straight months of declines that exceeded 20 percent. The National Association of Realtors® (NAR) said its Pending Home Sales Index (PHSI) fell 21.8 percent to 69.0. The decline in March was 20.8 percent. The Index is down by 33.8 percent year-over-year. This is the largest decline in pending home s... (read more) Home Purchase Apps Highest Since January Wed, May 27, 2020 9:50AM Purchase mortgage applications rose for the 6 th straight week, driving the Mortgage Bankers Association's Market Composite Index back into positive territory. The Index, a measure of mortgage loan application volume, increased 2.7 percent on a seasonally adjusted basis during the week ended May 22. On an unadjusted basis, the Index increased 3 percent compa... (read more) Freddie's Loan Portfolio on Pace to Increase by 14.3 Percent This Year Wed, May 27, 2020 10:58AM Freddie Mac reported this week that its total mortgage portfolio increased at an annualized rate of 14.3 percent in April, up from a 9.2 percent gain in March and the largest rate since December. The portfolio balance at the end of the period was $2.396 trillion compared to $2.368 trillion at the end of March and $2.216 trillion a year earlier. The growth ra... (read more) Doc, MSR, Broker Products; Private MI Companies Motor On; Continuing Jobless Claims Drop Thu, May 28, 2020 8:51AM With two business days left in May, one can feel the anticipation of the start of the “National Standing Desk League” opener coming up soon. I’m excited about that, and I’m excited that it’s garbage day here at the house. Taking out the garbage... What to wear, what to wear? What isn’t exciting for investors in mortgages a... (read more) Latest Video Trading Nation: Homebuilders surge 44% this quarter, here's where it could ... Pending home sales fell 21.8% in April Initial jobless claims total 2.123 million for week ending May 23 Grant on the Fed's balance sheet and money supply Around the Web Calculated Risk Blog Hotels: Occupancy Rate Declined 50.2% Year-over-year, Slight Increase Week-over-week Redfin Miami Real Estate: What it's like Buying a Home During COVID-19 Reuters Fed's Kaplan says U.S. economy has bottomed, ties rebound to testing Reuters Small-business loan terms eased under U.S. House-passed bill CNBC Millionaires cut spending, postpone big purchases for at least a year CNBC NY Fed President Williams says U.S. is not 'anywhere near' its limits to run up debt Calculated Risk Blog Freddie Mac: Mortgage Serious Delinquency Rate increased in April Reuters S&P 500 drifts higher on healthcare, tech lift CNBC Expanded unemployment benefits for self-employed reach 8 million workers Calculated Risk Blog Kansas City Fed: "Tenth District Manufacturing Activity Continued to Decline" in May CNBC Pending home sales plummet in April, but demand is showing signs of a rebound CNBC Debt balances rise as the debate over extending student loan forgiveness continues in Congress Calculated Risk Blog Q1 GDP Revised Down to -5.0% Annual Rate

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