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.

February 25, 2021 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 Feb 25, 2021 Highest Mortgage Rates Since June 2020 Wed, Feb 24, 2021 4:33PM 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 market has actually been signalling this sort of move since late last summer, but it wasn't an issue for mortgage rates for a variety of reasons. Now that the mortgage market has mostly exhausted its protective cushion against broader bond market volatility, when the broader bond market has a bad day, so do we. It goes without saying that today was bad... (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 5.5 101.26 -0.02   97.47 101.61 UMBS 30YR 6.0 102.50 -0.04   99.66 102.50 10 YR Treasury 4.048 +0.009   3.621 4.780 MBS Live Day Ahead: Just When You Thought It Wouldn't Get Much Worse Thu, Feb 25, 2021 10:37AM 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 satisf... (read more) MBS Price Change UMBS 5.0 99.73 -0.04 UMBS 5.5 101.26 -0.03 UMBS 6.0 102.50 -0.04 GNMA 5.0 100.04 -0.03 GNMA 5.5 101.20 +0.02 GNMA 6.0 102.15 -0.04 Pricing as of: 9/8 10:32PM EST US Treasury Yield Change 2 YR Treasury 3.496 +0.009 5 YR Treasury 3.572 +0.010 7 YR Treasury 3.776 +0.008 10 YR Treasury 4.049 +0.010 30 YR Treasury 4.700 +0.010 Pricing as of: 9/8 10:32PM EST Other News Mortgage Application Volume Continues Decline Wed, Feb 24, 2021 8:43AM 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 11.4 percent on a seasonally adjusted basis. It was the largest single week decline since the week ended April ... (read more) Pending Home Sales Post 5th Straight Loss Thu, Feb 25, 2021 10:47AM 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 percent from its December level. The index in January was at 122.8 compared to 125.5 in December and has lost 10... (read more) New Home Sales on the Rise 4.3% in January Wed, Feb 24, 2021 12:28PM 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 adjusted annual rate of 923,000 units. This is an increase of 4.3 percent compared to the upwardly revised (fr... (read more) Ops, MLO Jobs; Cap. Mkts., Valuation, Default, Fulfillment Tools; Technology and Processing Notes Thu, Feb 25, 2021 10:44AM 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 may cause some people to turn to drink… Is it going to “March Madness” at your shop with t... (read more) Latest Video Bill Baruch on 10-year hitting February high The 9am Bond Report - February 25, 2021 Carlyle’s Rubenstein: High unemployment is a bigger economic risk than mark... Fed Chair Powell has a bond dilemma as the economy recovers Around the Web CNBC Why stock investors are starting to really worry about rising bond yields CNBC Stocks just got some new competition from bonds as 10-year rate tops dividend yield CNBC Here's why jobless claims are the wrong way to understand unemployment in the U.S. Calculated Risk Blog Hotels: Occupancy Rate Declined 23.8% Year-over-year Calculated Risk Blog Q4 GDP Growth Revised up slightly to 4.1% Annual Rate Reuters Stocks rise, bond yields too - despite central banker talk-down efforts CNBC U.S. weekly jobless claims total 730,000, vs 845,000 estimate CNBC 10-year Treasury yield moves higher ahead of fourth-quarter GDP update Reuters Fedwire resumes operations after hourslong disruption CNBC Biden administration may undo certain Trump-era mortgage rules Calculated Risk Blog AIA: "Architecture Billings continue to contract" in January Reuters Wall Street regains footing after Powell calms inflation jitters Calculated Risk Blog A few Comments on January New Home Sales

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