October has been unpleasant for the bond market--Treasuries specifically.  That's not to say it's been a walk in the park for MBS.  They too have lost ground consistently throughout the month, but those losses have been far better contained relative to their recent range.  MBS are best characterized as "sideways" since August. Treasuries, on the other hand, were only really sideways through September.  Since then, they've broken 2 key range ceilings at .72 and .80. As the chart shows, the most recent break above 0.80 is already in question.  Yesterday's gain brought yields back under that technical level.  Any strength today would help confirm the positive shift.  So what would it take for bonds to log another win today?  As always, there are several ways to answer.  From a fundamental standpoint, one could argue that a confirmed 2nd wave of covid is driving a risk-off move for both sides of the market. But if we take a step back and add just a few more weeks to the chart above, the correlation isn't as reliable. With stocks down more than 2% at times this morning, and 10yr yields only down 1-2bps, we have to question the power of a risk-off move to motivate additional bond gains.  A better bet would be that both sides of the market are trying to find a range ahead of next Tuesday's election.  Fingers crossed, bonds seem content to have defined that range by safely staying under the highest yields since March.  Meanwhile, stocks are consolidating around a midpoint that's perfectly in line with pre-covid all-time highs. Best we can tell, stimulus prospects are off the table until after the election.  That's a blessing and a curse for the bond market because it means traders will be left to sort out a double whammy of volatility in 2 weeks when election results may be finalized and the Senate will be back in session. Bottom line: it makes sense for both sides of the market to be respecting ranges and favoring sideways movement given the uncertainty ahead.  If the 2nd wave of covid gets worse before it gets better AND if stimulus remains elusive in early Nov, bonds should have no problem continuing to operate in the same sideways range (with a 10yr ceiling under 1.0%).  And as long as Treasuries aren't doing any worse than that, MBS and mortgage rates have already proven their ability to outperform enough to guarantee with near certainty that rates wouldn't be any higher than they are right now.  Those are some big "ifs," granted, and they don't address the day-to-day volatility that can affect shorter-term lock/float decisions, but it's nice to know that mortgages don't need to be too concerned unless things get much worse in the broader bond market.

October 28, 2020 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 Oct 28, 2020 Mortgage Rates Mostly Flat Despite Stronger Bond Market Tue, Oct 27, 2020 4:45PM Mortgage rates are mostly determined by the trading levels of mortgage-backed bonds on the open market. When those bonds improve, mortgage rates move lower, all other things being equal. For a variety of reasons, that typical relationship has been hit and miss on any given day since the pandemic began. Today is a milder example. Bonds improved, but the average mortgage lender is offering rates that are nearly unchanged versus yesterday. The trade-off is that mortgage rates stayed much lower than the bond market suggested for most of the rest of the month of October. In other words, mortgage ra... (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 5.5 101.24 -0.04   97.47 101.61 UMBS 30YR 6.0 102.48 -0.06   99.66 102.50 10 YR Treasury 4.051 +0.012   3.621 4.780 MBS Live Day Ahead: Bonds Confirming a Friendly Bounce, But With Lots of Help Wed, Oct 28, 2020 10:03AM October has been unpleasant for the bond market--Treasuries specifically.  That's not to say it's been a walk in the park for MBS.  They too have lost ground consistently throughout the month, but those losses have been far better contained relative to their recent range.  MBS are best characterized as "sideways" since August. Treasurie... (read more) MBS Price Change UMBS 5.0 99.71 -0.07 UMBS 5.5 101.24 -0.04 UMBS 6.0 102.48 -0.06 GNMA 5.0 100.03 -0.05 GNMA 5.5 101.19 +0.00 GNMA 6.0 102.13 -0.05 Pricing as of: 9/9 2:38AM EST US Treasury Yield Change 2 YR Treasury 3.501 +0.013 5 YR Treasury 3.575 +0.013 7 YR Treasury 3.779 +0.010 10 YR Treasury 4.051 +0.012 30 YR Treasury 4.697 +0.006 Pricing as of: 9/9 2:38AM EST Other News Homeownership is Growing, Especially Among Younger Age Groups Tue, Oct 27, 2020 12:07PM The U.S. homeownership rate in the third quarter fell back slightly from the prior quarter. The second quarter saw the highest level for homeownership since the second quarter of 2008. Homeownership in the third quarter, according to the U.S. Census Bureau, was 67.4 percent, 0.5-point decrease from the previous period, but up from 64.8 percent in the third q... (read more) Spring Buying Season Shifts, Home Prices Rocket Higher Tue, Oct 27, 2020 11:23AM The impact of low interest rates and pent up buyer demand played out in sharply increasing home prices in August. Both the Federal Housing Finance Agency (FHFA) and S&P CoreLogic Case-Shiller indices posted significant appreciation on an annual basis and acceleration in that appreciation compared to prior months. CoreLogic Deputy Chief Economist Selma He... (read more) Freddie's Loan Volume is Up, Delinquency Rate Begins to Retreat Tue, Oct 27, 2020 11:00AM Freddie Mac reported this week that its total mortgage portfolio increased at an annualized rate of 17.5 percent in September compared to a 27.7 percent gain in August. The portfolio balance at the end of the period was $2.570 trillion compared to $2.533 trillion the prior month and $2.295 trillion a year earlier. The growth rate for the year to date is 13.7... (read more) Ops Jobs; Marketing, Broker, Contactless Closing Products; Investors and Adverse Mkt. Price Moves Wed, Oct 28, 2020 11:52AM Surely not everyone was kung fu fighting, right? I hope that we don’t see any fighting after November 3. I love to ask people, who think we’re going to see volatility next week, a) why, and b) what kind? We could very well see no huge jumps of any sort. From a capital markets perspective, it’s not as if the Fed is going to hike short term r... (read more) Latest Video Tom Lee: Fed will intervene to protect markets if there's a contested elect... Corelogic receives potential bids at more than $80 per share, sources tell ... The 9 a.m. Bond Report: October 28, 2020 Mortgage refinances see slight boost thanks to drop in rates Around the Web CNBC Germany announces new Covid restrictions, France braces for more as virus surges across Europe NAHB Eye on Housing Some Buyers Perceive an Improvement in Housing Affordability CNBC Real estate fintech CoreLogic receives multiple bids at more than $80 a share, sources say Calculated Risk Blog Zillow Case-Shiller House Price Forecast: "Annual growth in September as reported by Case-Shiller is expected to accelerate" CNBC As Washington delays stimulus, the Fed appears to be running out of ways to help the actual economy Bloomberg Former NY Fed Pres: The Fed Is Really Running Out of Firepower CNBC What American workers have gained"and lost"from more than 200 days of remote work NAHB Eye on Housing Homeownership During the Third Quarter: Technical Issues CNBC The psychology of buying a house: Is it a key to happiness or just a source of stress? NAR - Realtor.com Struggling Rental Market Could Usher in Next American Housing Crisis Calculated Risk Blog Note: October Employment Report Will Show a Decrease of 147,000 Temporary Census Workers Calculated Risk Blog HVS: Q3 2020 Homeownership and Vacancy Rates CNBC Home prices in August see biggest gains in more than two years, S&P Case Shiller says

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