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Rates Running Out of Things to be Afraid Of?
Bonds improved today--mostly during the overnight trading session, but they did a good job defending those gains during domestic hours. Friendly Fed comments and weaker economic data were only modestly helpful. On the other side of the battle, heavy corporate bond issuance, negative technical momentum and yesterday's vaccine news should at least be keeping the bears in the fight. If those factors aren't enough to keep the threat of 1.0%+ 10yr yields on the table this week, it's hard to imagine what would be.
Econ Data / Events
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Retail Sales 0.3 vs 0.5 f'cast, 1.6 prev (revised down from 1.9)
Core Retail Sales 0.1 vs 0.5 f'cast
Last month's Retail Sales revised lower by 0.3 (and "core" by 0.5)
Industrial Production 1.1 vs 1.0 f'cast, -0.4 prev
Builder Confidence 90 vs 85 f'cast, 85 prev
Market Movement Recap
08:46 AM Bonds rallied during European market hours with 10yr yields roughly 3bps lower at .885 to start the domestic session. Weaker Retail Sales data helped bonds gain a bit more ground and caused overnight stock weakness to extend a bit. UMBS 1.5 and 2.0 coupons are both an eighth a point lower with a small fraction of those gains arriving after the data.
12:57 PM Much like yesterday, bonds are sticking to narrow ranges without much fuss. Apart from the morning's Retail Sales reaction, econ data hasn't played a big role. Notably, bonds are holding gains despite a recovery in stocks. 10yr yields are down 3.3bps at .878 and MBS are up just over an eighth of a point.
03:40 PM Both Treasuries and MBS are near their best levels of the day as trading winds down. The gains come in spite of heavy corporate bond issuance and a mid-day bounce in stocks. We can point toward technicals, economic data, and downbeat comments from Fed speakers (comments that spoke to the possibility of additional accommodation in December).
MBS Commentary
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Rates Running Out of Things to be Afraid Of?
Bonds improved today--mostly during the overnight trading session, but they did a good job defending those gains during domestic hours. Friendly Fed comments... (read more)
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Rob Chrisman
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Predictions? Show me one person, a year ago, who forecast what has happened (so far) this year! (I went to see a psychic the other day. I knocked on the door and she yelled, “Who’s there?” so I left.) Lenders do their thing, regardl... (read more)
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Mortgage Rate Watch
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Last week, trial results from Pfizer's covid vaccine sent shockwaves through financial markets. Stock prices and bond yields both moved decisively higher. In general, higher bond yields coincide with higher mortgage rates. Last week was no exception,... (read more)
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Housing News
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The National Association of Realtors® (NAR) said on Thursday that home prices have continued to grow in each of the 181 areas it tracks for its quarterly metro home price report. Both record-low mortgage rates and depleted inventories of existing... (read more)
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Housing News
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The number of COVID-19 related forbearances plans headed downhill at an increasing pace over the last few week although there is no guarantee the improvement will continue. Black Knight says there was another 4 percent decline , representing 121,000 ... (read more)
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Housing News
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Mortgage applications , especially for home purchases, pulled back from the previous week's level. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 0.5 percent on a seasonally adjusted... (read more)
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