http://www.mortgagenewsdaily.com/topic/mbs Mortgage Rates Blog https://www.mortgagenewsdaily.com/markets/mbs-recap-07312026 Fri, 31 Jul 2026 20:08:11 GMT 6a6d0f64a6791958c56dafa0 Matthew Graham Esoteric Forex Drama Blasts Bonds, Maybe Friday was very much NOT on the beaten path of typical bond market considerations with most of the selling arguably stemming from Japanese currency intervention. We've seen similar episodes in the past, but  today's installment came with a twist. In addition to Japan confirming it was selling foreign bonds to prop up Yen values, the U.S. Treasury also apparently got involved. It warned dealers that it could make trades to support the Yen. No one but those involved knows if that means anything beyond using the ESF to execute currency trades, but the net effect seems to have been to grease the skids for U.S. accounts to sell Treasuries first and ask questions later. This isn't necessarily the final story either. It was also month-end, and it's also the week before the jobs report on a summertime Friday. Volume was fairly light relative to the size of the sell-off. Econ Data / Events Employment costsQ2 0.9% vs 0.8% f'cast, 0.9% prev Market Movement Recap 08:39 AM Weaker after ECI data. MBS down about an eighth and 10yr up 2.3bps at 4.696 10:29 AM Sharply weaker. MBS down a quarter point and 10yr up 4.9bps at 4.722 01:06 PM Weakest levels. MBS down almost 3/8ths and 10yr up 6.2bps at 4.736 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07312026 Fri, 31 Jul 2026 13:09:40 GMT 6a6cacf4a6791958c56ced9f Matthew Graham Japan's Ministry of Finance (MOF) and central bank (BOJ) are a bit more closely linked than Treasury and the Fed. For example, the MOF can instruct the BOJ to sell a bunch of securities to pop up the value of domestic currency. They did this in relatively grand fashion yesterday, but the selling didn't appear to involve Treasuries (as it sometimes does). Now in today's overnight session, there was another Yen-specific spike and this time, it lines up with the start of selling pressure in Treasuries. It's not extreme, and it correlated with Iran headlines causing oil prices to rise. If anything, the timing actually lines up better with oil. Last but not least, this morning's ECI data added a small but measurable amount of selling. 10yr yields are flirting with 4.7 and MBS are down just over an eighth--not massive weakness considering the inputs. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07302026 Thu, 30 Jul 2026 20:14:47 GMT 6a6bbf10a6791958c56b4b73 Matthew Graham Bullets Dodged We've seen our fair share of bonds punishing the market on occasions where bond traders were forced to worry about a significant change in a fiscal or monetary regime (or the absence of a desired change). Wednesday's reaction to the Fed ran the risk of setting the stage for similar momentum. While it did technically continue, it was far less forceful on Thursday. Additionally, the evidence was limited to curve steepening rather than outright losses (apart from 30yr bonds). In short, bonds fired a warning shot, but they're not going to obsess about it unless given additional reasons. Econ data was plentiful this morning, but had little impact on trading levels. Oil/fuel price correlations remain and should continue to provide guidance for bonds until war-related volatility is in the rearview. Econ Data / Events Continued Claims (Jul)/18 1,782K vs 1800K f'cast, 1796K prev Core PCE (m/m) (Jun) 0.1% vs 0.2% f'cast, 0.3% prev Core PCE (y/y) (Jun) 3.3% vs 3.3% f'cast, 3.4% prev GDPQ2 1.5% vs 2.1% f'cast, 2.1% prev Jobless Claims (Jul)/25 197.0K vs 200K f'cast, 187K prev PCE (y/y) (Jun) 3.7% vs 3.7% f'cast, 4.1% prev PCE prices (m/m) (Jun) -0.1% vs -0.1% f'cast, 0.4% prev Market Movement Recap 08:34 AM Modestly stronger overnight and no major reaction to data. MBS up 1 tick (.03) and 10yr unchanged at 4.68 12:48 PM MBS up 5 ticks (.16) and 10yr down 2.3bps at 4.657 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07302026 Thu, 30 Jul 2026 13:40:07 GMT 6a6b627ca6791958c56a959e Matthew Graham This morning could have been much worse. The bond market could have continued spiraling on fear that it is now responsible for conducting monetary policy--something that sounds weird when you first read it, but is actually central to the discussion based on Warsh's comments in yesterday's press conference. In short, bonds tightened policy yesterday and acknowledged that the Fed did not (2yr lower, 10/30yr much higher). That theme is continuing this morning, but thankfully is only playing out in curve trading as 30yr bonds are flat while 2yr yields continue dropping. Ho-hum econ data helped by staying out of the way (no major reaction in terms of volume or volatility as it stands). MBS are up just over an eighth and 10s are down 2bps. Bad news: rates/yields are still right in line with long-term highs. Good news: they're not breaking those highs. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07292026 Wed, 29 Jul 2026 21:47:49 GMT 6a6a83d4a6791958c56908f8 Matthew Graham What's Up With Today's Paradoxical Fed Reaction? Tough day for the casual observer to try to make sense of what happened. There's even some disagreement between the not-so-casual observers. Let's focus on what we can know for sure. The Fed didn't hike. The market was pricing a 1 in 3 chance of a hike, so the shortest end of the curve logically rallied on that. Longer term rates rallied a bit too, at first. No surprises as of 2:30pm. Warsh's prepared remarks weren't significant, and the rally remained intact. Things began to change rapidly when he suggested looking beyond PCE to a broader set of inflation data to achieve the 2% target. While that could speak to a genuine desire to improve the Fed's understanding of inflation, the market could also view it as an excuse to avoid hiking. He also suggested that there was less urgency to consider a hike because the bond market was already doing the Fed's job by moving toward higher rates. Traders could also view this as an excuse to avoid hiking. Taken together, cynical traders might even be thinking that Warsh will continue to talk tough on inflation, but also continue forcing the long end of the yield curve to do the Fed's heavy lifting. In May, we warned that the long end would quickly punish any perceived attempt to keep the short end artificially lower and today was the first day where that offered the cynics a shred of evidence. NOTE: we take no position on whether the cynics are right or wrong, but this is the most obvious way to justify an otherwise excessively paradoxical reaction--ESPECIALLY when we consider that bonds stopped selling the moment the press conference ended.  Market Movement Recap 08:49 AM Logically weaker overnight as Iran fighting resumes. MBS down an eighth and 10yr up 2bps at 4.628 12:08 PM Weakest levels. MBS down 7 ticks (.22) and 10yr up 4.1bps at 4.648 02:02 PM First move is stronger after Fed holds rates. MBS approaching unchanged levels and 10yr still up 1.4bps on the day at 4.62 04:20 PM weakest levels. MBS down 9 ticks (.28) and 10yr up 8.6bps at 4.693 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-07292026 Wed, 29 Jul 2026 18:00:46 GMT 6a6a4deca6791958c5689dd8 Matthew Graham The Federal Open Market Committee approved the following statement for release by a 12 9 – 0 3 vote: The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee reaffirmed is continuing its policy of maintaining ample reserves in the banking system. Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability. Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07292026 Wed, 29 Jul 2026 13:49:21 GMT 6a6a1354a6791958c5682e81 Matthew Graham The big news over the weekend was that the U.S. and Iran paused hostilities--something that led to 2 solid days of gains in the bond market. But in the overnight session, the pause ended as multiple attacks were reported on both sides. Oil rose predictably and bond yields did the same. One "pause" that's less likely to change is the Fed's abstention from hiking or cutting in 2026--at least not today. That may seem like a strong claim given futures pricing showing a 36% chance of a hike today. While a hike is in the realm of possibility, it's not in the 1 in 3 realm. That number represents an uncertainty premium compounded by the new forward guidance regime and the highly fluid nature of fuel price implications for additional inflation. Nonetheless, the fact that a third of the futures market is positioned for a hike means there's higher odds of volatility at this meeting compared to a normal July Fed meeting (usually pretty sleepy, so it's not necessarily a high bar). As a reminder, there is no dot plot with any July Fed meeting. We don't yet know if the Warsh Fed will phase out the dot plot or modify it.  Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07282026 Tue, 28 Jul 2026 20:04:47 GMT 6a6919b8a6791958c56678df Matthew Graham Giving Peace (And Bonds?) a Chance Granted, it may be far less promising than some of the more conclusive headlines that led up to previous ceasefires and peace memos, but Tuesday delivered at least a modicum of hope that war sentiment is shifting. In not so many words, an Israeli media outlet reported that U.S./Iran mediators are getting closer to re-implementing the previous memo of understanding that paved the way toward more permanent peace. Markets take this with a grain of salt for obvious reasons, but it was enough to lift stocks and cause a small-but-quick drop in oil prices and bond yields. There were no other major market movers in play. Econ Data / Events Case Shiller Home Prices-20 y/y (May) 1.6% vs 1.3% f'cast, 1.1% prev CaseShiller 20 mm nsa (May) 0.9% vs -- f'cast, 1% prev FHFA Home Price Index m/m (May) 0.3% vs 0.2% f'cast, -0.1% prev FHFA Home Prices y/y (May) 2.2% vs -- f'cast, 2% prev Market Movement Recap 09:05 AM Slightly stronger start. MBS up 3 ticks (.09) and 10yr down 2.5bps at 4.63 10:17 AM Gaining ground as stocks sell. MBS up 5 ticks (.16) and 10yr down 4.1bps at 4.613 01:36 PM Off best levels, but still much stronger. MBS up 9 ticks (.28) and 10yr down 5.5bps at 4.599 03:41 PM Holding most of the rally after hours. MBS up a quarter point and 10yr down 5.2bps at 4.603 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-07282026 Tue, 28 Jul 2026 13:28:17 GMT 6a68bd24a6791958c565c8d5 Matthew Graham Once again, bond yields dropped in the overnight session in concert with lower oil prices. Today's iteration is less swift than yesterday's, but after last week's sell-off, we'll take any green we can get. Econ data is light and inconsequential. The 7yr Treasury auction is typically not a source of drama. That leaves focus on any notable war headlines. Otherwise, Wednesday afternoon's Fed announcement remains the week's focal point for clarifying the Fed's policy stance and for the bond market to adjust accordingly.  The big picture remains little-changed, but slightly less dire than last week. Yields have returned inside the long-term trend channel. This doesn't predict the future, but it's nice to be inside the blue lines than breaking wildly above them. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-07272026 Mon, 27 Jul 2026 20:15:45 GMT 6a67ca90a6791958c5641fb5 Matthew Graham Compared to Oil, Yields Not Quite as Willing to Drop While the moment-to-moment correlation between bond yields and oil prices remained almost perfectly intact today, yields were less willing to follow the bigger drops. In other words, if we benchmark bonds to oil price movement, they underperformed the drop in oil prices. $139 billion in Treasury auctions and defensive positioning ahead of Wednesday's Fed announcement likely both contributed to that underperformance. Bottom line: it's encouraging to see the willingness to follow oil, but we won't be able to see more unrestrained trading until after Wednesday afternoon. Econ Data / Events Core CapEx (Jun) 0.9% vs 0.8% f'cast, 1.6% prev Durable goods (Jun) 0.3% vs 2.5% f'cast, -4.5% prev Market Movement Recap 08:32 AM Stronger overnight with oil. MBS up 6 ticks (.19) and 10yr down 3.6bps at 4.646 10:28 AM Some volatility on war headlines, but still stronger. MBS up 5 ticks (.16) and 10yr down 2.9bps at 4.654 02:33 PM Fairly flat all day. MBS up 5 ticks (.16) and 10yr down 3.8bps at 4.645 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs