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Surprisingly Swift Selling in The Bond Market; What's Next?
This week has been one of the most surprising selling sprees in bonds in the post-covid era. Just when you think we've surely seen enough selling to bring buyers in, it's right back to new long-term high yields and significantly lower MBS prices. That bounce is coming, to be sure, but it's a risky proposition to bet on it. Moreover, when it happens, it changes nothing about the broader trend toward higher yields that's been intact for more than 6 months. This week just happens to offer a more abrupt adjustment to the pace of that trend.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
Markit PMI Composite 58.8 vs 58.7 prev
Existing Home Sales 6.69m vs 6.61m f'cast, 6.65m prev
Market Movement Recap
08:28 AM Treasuries opened modestly stronger in Asia, but 10yr yields failed at 1.28% again. Steady-to-stronger data in Europe pushed yields higher heading into the domestic session. 10yr is up 1.4bps at 1.311% and 2.0 UMBS are down nearly an eighth.
10:25 AM After an underwhelming attempt at a friendly bounce after 9:30am, bonds are on the back foot again and MBS are quickly down to new lows (and 10yr up to new highs of 1.336+). There are no new market movers in play in terms of data or headlines (but big trades hit TSY futures at 10:08am and added to the weakness).
12:23 PM 1.338 ceiling held up against multiple breakout attempts but finally gave way a short while ago. Yields are doing what yields do after a technical breakout (moving higher). Currently over 1.35%. MBS aren't happy about it. 2.0 coupons are down 3/8ths and the increasingly relevant 2.5 coupons are down almost a quarter point.
02:51 PM More minutes on the clock, more bond selling. Highest highs of the day shortly after the last update with 10yr hitting 1.36+. UMBS 2.0 coupons were as low as 101-16 (101.5) briefly. Both have bounced modestly since then, but the damage is done as far as rate sheets and reprice potential are concerned.
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MBS Commentary
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Surprisingly Swift Selling in The Bond Market; What's Next?
This week has been one of the most surprising selling sprees in bonds in the post-covid era. Just when you think we've surely seen enough sell... (read more) |
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Mortgage Rate Watch
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Volatility has returned to the mortgage market in grand fashion this week with many lenders quoting rates that are as much as a quarter of a point higher than they were last week. That means if you were looking at something in the 2.75% neighborhood ... (read more) |
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Rob Chrisman
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(To listen to the audio version of today’s commentary, please click here .) I received many nice comments about the section in yesterday’s commentary about losing people in our industry before their time. Unfortunately, there was one that... (read more) |
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Housing News
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Builders appear to be prepping for a huge spring . While the U.S. Census Bureau and the Department of Housing and Urban Development report that housing starts were down in January, typically the case in winter, housing permits were issued at what is ... (read more) |
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Housing News
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After dropping from record high levels by a total of 7 points over the last two months, the index that measures home builder confidence has stabilized. The Housing Market Index (HMI), produced by the National Association of Home Builders (NAHB) and W... (read more) |
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Housing News
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The White House announced on Tuesday that the various COVID-19 relief programs available through The Department of Housing and Urban Development, Veterans Administration, and the Department of Agriculture will be extended. The forbearance program, wh... (read more) |
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