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Sobering Reminder About Rising Rate Trend
By yesterday afternoon, the bond market had managed to string together several of the most reassuring days of 2021. 10yr yields were close to 1.50% by the end of the day and the next significant ceiling at 1.62% seemed safely overhead. But only a few hours into the new trading day, 10yr yields surged up to 1.64+, the highest levels in more than year. Average mortgage rates are close to being able to say the same (highest in 11 months). Today's rout provides a wake up call as to the nature of the rising rate environment.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
Core Producer Prices (y/y) 2.5 vs 2.6 f'cast, 2.0 prev
Market Movement Recap
08:51 AM Much weaker overnight with big hits coming at random times for no apparent reason (speaks to embedded bearish momentum, technicals, and positioning). 10yr up almost 7bps to 1.604%. UMBS 2.5 coupons down a quarter point.
10:35 AM 10yr has broken the 1.62% ceiling, triggering additional stop-loss selling (up and over 1.63%). UMBS 2.5s were down nearly half a point at their weakest levels, but have recovered a few ticks in the past few minutes. Either way, not what we were hoping to see this morning on top of earlier weakness we weren't hoping to see today.
02:48 PM All of today's damage was done by 10:30am and things have been very flat since the last update. At this point, whatever happens in the last 2 hours of trading doesn't have any major implications for next week. 10yr is up 10bps at 1.63% and 2.5 UMBS are down more than 3/8ths of a point at 103.
MBS Commentary
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Sobering Reminder About Rising Rate Trend
By yesterday afternoon, the bond market had managed to string together several of the most reassuring days of 2021. 10yr yields were close to 1.50% by the end o... (read more)
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Housing News
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Fannie Mae has sent lenders an advanced notice that additional risk criteria is coming for loans it acquires from lenders. Lender Letter 2021-08 lays out changes mandated by amendments to the Senior Preferred Stock Purchase Agreement (PSPA) between t... (read more)
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Housing News
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Black Knight notes a large improvement in forbearance statistics during the week ended March 9. The number of loans in active plans dropped by 77,000 over the week, the largest single week decline since early January, and lowered the number of plans ... (read more)
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Mortgage Rate Watch
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Mortgage rates improved microscopically today as the underlying bond market stayed uncharacteristically steady. Since the beginning of 2021, bonds have been exceptionally volatile with yields moving higher and prices moving lower. That's a recipe for... (read more)
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Rob Chrisman
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A year ago… remember when you couldn’t find toilet paper for sale? Now you can’t find a house for sale. But there are plenty of Agency MBS and other debt for sale. Just as borrowers are lowering their debt load by refinancing their... (read more)
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Housing News
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Access to mortgage credit remained unchanged in February after making modest gains over the previous four months. The Mortgage Bankers Association said its Mortgage Credit Access Index, was remained at the January level of 124.6. A lower score indica... (read more)
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