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Awesome Bounce Back But Still a Cautionary Tale
Bonds started the day quite a bit weaker after several pieces of EU econ data came in much stronger than expected. GDP had no impact, but yields spiked shortly thereafter as one gigantic seller hit the Treasury complex, prompting copycat trades. A slump in stocks may or may not have helped bonds find their footing. Either way, yields drifted lower throughout the afternoon, ultimately hitting the 3pm close less than 3bps higher on the day after being more than 8bps higher this morning. MBS outperformed, and are currently + 2 ticks (+0.06) with just over an hour to go. That's a stellar recovery, but with yields ending the day higher, this week's underlying message remains cautionary. Treasuries were in a rally trend all month and this week is clearly a push back against that.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
Jobless Claims 553k vs 549k f'cast, 566k prev
GDP 6.4 vs 6.1 f'cast, 4.3 prev
Pending Home Sales +1.9 vs +5.0 f'cast, -11.5 prev
Market Movement Recap
08:17 AM Significantly stronger EU econ data put obvious and immediate upward pressure on yields overnight. 10yr starting out up 5+ bps at 1.663. UMBS 2.5 coupons are down 5 ticks (.16) at 103-11 (103.34).
09:24 AM Tremendous volatility in MBS by the time we consider bid vs ask prices (only bid prices are visible on MBS Live). Bonds weakened quickly just after 9am with 10yr yields hitting 1.681% before bouncing slightly lower (1.675 currently). 2.5 UMBS hit 103-07 (103.22) before bouncing up to 103-11 (103.34) in the blink of an eye. This is still 6 ticks lower on the day (-.19).
12:27 PM Very decent bounce back for bonds, drawing some inspiration from stock market weakness and a technical ceiling at 1.68% in 10yr yields (now down to 1.65%). MBS are outperforming with 2.5 coupons within 2 ticks (.06) of unchanged.
03:50 PM Solid recovery is now fairly stellar as 10yr yields claw back more than 5bps of weakness (still 3bps weaker on the day). MBS, however, are GREEN now, with 2.5 coupons up 2 ticks (+0.06). Credit light supply, heavy Fed buying, friendly Powell y'day, and month-end positioning (favorable index extension for MBS).
MBS Commentary
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Awesome Bounce Back But Still a Cautionary Tale
Bonds started the day quite a bit weaker after several pieces of EU econ data came in much stronger than expected. GDP had no impact, but yields spiked sh... (read more)
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Housing News
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Earlier this month the Urban Institute pointed out that the unprecedented low interest rates of the pandemic era have not benefitted everyone. Their research showed that tightening credit access has meant that low income homeowners, and those with hi... (read more)
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Housing News
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There has been a significant reduction mortgage processing times since the first of the year according to ICE Mortgage Technology. Its Origination Insight Report says that the time to close a purchase mortgage, which averaged 57 days in January decli... (read more)
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Housing News
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While the degree to which is happened was somewhat disappointing, pending home sales did snap out of a two-month slump in March . The National Association of Realtors'® (NAR's) Pending Home Sales Index (PHSI) rose 1.9 percent to 111.3 in March an... (read more)
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Mortgage Rate Watch
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The Federal Reserve released a new policy announcement today. This is one of the 8 times per year where the Fed can opt to change "rates," or adjust its other policies that impact "rates." Fed announcement days have a track record as being some of th... (read more)
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Rob Chrisman
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A “google” is the large number of 1 with 100 zeroes after it. For lenders, a billion is a large number, and it would be unheard of for a lender to save $1 billion in costs. But that is what Google’s parent Alphabet Inc. is saving , ... (read more)
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