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20th May, 26
Full Reversal And Then Some
Full Reversal And Then Some Bonds more than made up from Tuesday's rout with a massive rally on Wednesday. Unlike Tuesday's move, which was driven by bond-market-specific selling pressure on the part of one account's massive liquidations, Wednesday's rally was broad-based and driven by war-related headlines. Specifically, newswires suggested the U.S. and Iran are now very close to agreeing on a plan to end the war. The market isn't just hearing "wolf!" It's pretty sure it's seeing an actual wolf on the horizon. This is important and ongoing proof of concept regarding the prospect of additional
Full Reversal And Then Some
Full Reversal And Then Some Bonds more than made up from Tuesday's rout with a massive rally on Wednesday. Unlike Tuesday's move, which was driven by bond-market-specific selling pressure on the part of one account's massive liquidations, Wednesday's rally was broad-based and driven by war-related headlines. Specifically, newswires suggested the U.S. and Iran are now very close to agreeing on a plan to end the war. The market isn't just hearing "wolf!" It's pretty sure it's seeing an actual wolf on the horizon. This is important and ongoing proof of concept regarding the prospect of additional
20th May, 26
Mortgage Rates Recover All of Yesterday's Losses
Wednesday brought some much-needed relief for the mortgage market after rates surged to new 9 month highs of 6.75% yesterday. Whereas that rate spike was decoupled from the prevailing narrative of war-related headlines, today's recovery was quite the opposite. Newswires came out shortly after 10am ET that suggested the U.S. and Iran are nearing a final draft of a peace agreement. While such news has been prone to correction and revision, the market was nonetheless willing to respond quickly and rather forcefully. Oil prices dropped sharply with Treasury yields in tow. In the bond market, "
Mortgage Rates Recover All of Yesterday's Losses
Wednesday brought some much-needed relief for the mortgage market after rates surged to new 9 month highs of 6.75% yesterday. Whereas that rate spike was decoupled from the prevailing narrative of war-related headlines, today's recovery was quite the opposite. Newswires came out shortly after 10am ET that suggested the U.S. and Iran are nearing a final draft of a peace agreement. While such news has been prone to correction and revision, the market was nonetheless willing to respond quickly and rather forcefully. Oil prices dropped sharply with Treasury yields in tow. In the bond market, "
20th May, 26
TPO Non-QM, Vendor Strategy, Cybersecurity Tools; NY Conference Talk; Fed Raise Coming?
Here in New York, as over a thousand of us head to airports (hopefully avoiding manholes… tragic), the mood has been pragmatic. Not overly optimistic, not somber, just realistic. No one is arguing that the war hasn’t driven up worldwide oil prices, impacting inflation and borrower psychology, impacting lending. The Mortgage Bankers Association now predicts a Federal Reserve rate hike to arrive in 2027, so any lenders or originators hoping for lower rates, well… At this point there isn’t a lot of reason for rates to drop unless higher oil prices slow the economy further. We knew that a
TPO Non-QM, Vendor Strategy, Cybersecurity Tools; NY Conference Talk; Fed Raise Coming?
Here in New York, as over a thousand of us head to airports (hopefully avoiding manholes… tragic), the mood has been pragmatic. Not overly optimistic, not somber, just realistic. No one is arguing that the war hasn’t driven up worldwide oil prices, impacting inflation and borrower psychology, impacting lending. The Mortgage Bankers Association now predicts a Federal Reserve rate hike to arrive in 2027, so any lenders or originators hoping for lower rates, well… At this point there isn’t a lot of reason for rates to drop unless higher oil prices slow the economy further. We knew that a
20th May, 26
Bleeding Subsides For Now, Headlines Helping But Bonds Remain Cautious
Tuesday's massive wave of bond-specific weakness still has the analytical community scratching its collective head. Our contacts are either saying nothing or telling us they're just as perplexed. So far this morning, there hasn't been any sort of repeat performance. Lower oil prices have helped bonds find their footing, but the move has relied on breaking news regarding the potential for the final text of the peace agreement to be drafted by tomorrow. On the calendar front, the 2pm FOMC Minutes release is the only thing that seems like it might be relevant, but as a reminder, this
Bleeding Subsides For Now, Headlines Helping But Bonds Remain Cautious
Tuesday's massive wave of bond-specific weakness still has the analytical community scratching its collective head. Our contacts are either saying nothing or telling us they're just as perplexed. So far this morning, there hasn't been any sort of repeat performance. Lower oil prices have helped bonds find their footing, but the move has relied on breaking news regarding the potential for the final text of the peace agreement to be drafted by tomorrow. On the calendar front, the 2pm FOMC Minutes release is the only thing that seems like it might be relevant, but as a reminder, this
19th May, 26
Whales Making Waves in Treasury Futures
Whales Making Waves in Treasury Futures Nerd alert: there's no way to discuss what happened in the bond market today without getting a bit nerdy. Reason being, there was an absolute deluge of block trades in Treasury futures (over $20bln--the biggest day we can remember for outright block trades). There are a few different possibilities for how this went down, but the size, structure, and timing of those trades suggests that only one or two massive players were involved. The saving grace of a move like this is that it means there was not broad-based selling pressure from a majority of the
Whales Making Waves in Treasury Futures
Whales Making Waves in Treasury Futures Nerd alert: there's no way to discuss what happened in the bond market today without getting a bit nerdy. Reason being, there was an absolute deluge of block trades in Treasury futures (over $20bln--the biggest day we can remember for outright block trades). There are a few different possibilities for how this went down, but the size, structure, and timing of those trades suggests that only one or two massive players were involved. The saving grace of a move like this is that it means there was not broad-based selling pressure from a majority of the
19th May, 26
Mortgage Rates Jump Again, Now up 0.75% Since Start of The War
It was another rough day for the bond market and, thus, for interest rates. Investors aggressively sold bonds in the first 2 hours of trading, taking 10yr Treasury yields to the highest level in more than a year. Mortgage-specific bonds have been doing better versus Treasuries in recent months thanks to increased purchase demand from Fannie Mae and Freddie Mac. All else equal, higher demand for mortgage bonds = lower rates, relatively. In the current case, it means mortgage rates haven't moved up as much as Treasury yields over the past 6 months. That said, rates have still definitely moved
Mortgage Rates Jump Again, Now up 0.75% Since Start of The War
It was another rough day for the bond market and, thus, for interest rates. Investors aggressively sold bonds in the first 2 hours of trading, taking 10yr Treasury yields to the highest level in more than a year. Mortgage-specific bonds have been doing better versus Treasuries in recent months thanks to increased purchase demand from Fannie Mae and Freddie Mac. All else equal, higher demand for mortgage bonds = lower rates, relatively. In the current case, it means mortgage rates haven't moved up as much as Treasury yields over the past 6 months. That said, rates have still definitely moved
19th May, 26
AI, Construction, Servicing, QC Products; NY Conference Chatter; AI Governance; LO Comp
One of the discussion topics here in New York at the MBA conference is, just like every other conference, artificial intelligence, and one of the questions is, “Who’s accountable if something goes wrong?” Any one of us in capital markets will tell you that, in the case of Freddie, Fannie, investors, and so on, lenders are held ultimately accountable for anything that goes wrong. In the event of a buyback, or default, a lender can’t point at an AI vendor and say, “You cover the losses.” Make sure that with any software that you buy you know where it came from and how it was designed
AI, Construction, Servicing, QC Products; NY Conference Chatter; AI Governance; LO Comp
One of the discussion topics here in New York at the MBA conference is, just like every other conference, artificial intelligence, and one of the questions is, “Who’s accountable if something goes wrong?” Any one of us in capital markets will tell you that, in the case of Freddie, Fannie, investors, and so on, lenders are held ultimately accountable for anything that goes wrong. In the event of a buyback, or default, a lender can’t point at an AI vendor and say, “You cover the losses.” Make sure that with any software that you buy you know where it came from and how it was designed
19th May, 26
Increasing Signs of Bond-Specific Panic
Ever since the initial 2 week ceasefire was announced in the Iran war, the bond market has adhered to trend channels that align with either de-escalation or re-escalation sentiment. Nothing too complicated here: if sentiment is trending in favor of peace, bonds have rallied. If sentiment is deteriorating, bonds have sold off. There was a temporary diversion as traders waited to see if last week's China summit would be a catalyst for a shift. When the summit failed to deliver, yields jumped back in line with the re-escalation trend. Now this morning, they're already challenging the bearish
Increasing Signs of Bond-Specific Panic
Ever since the initial 2 week ceasefire was announced in the Iran war, the bond market has adhered to trend channels that align with either de-escalation or re-escalation sentiment. Nothing too complicated here: if sentiment is trending in favor of peace, bonds have rallied. If sentiment is deteriorating, bonds have sold off. There was a temporary diversion as traders waited to see if last week's China summit would be a catalyst for a shift. When the summit failed to deliver, yields jumped back in line with the re-escalation trend. Now this morning, they're already challenging the bearish
18th May, 26
Bombarded by Headlines, But Little-Changed
Bombarded by Headlines, But Little-Changed Monday's trading session ended up being an exercise in headline-watching, as has been the case on so many days since the start of the Iran war. Today was more active than normal in that regard. The earliest headlines (as covered in the AM commentary) were helpful until they weren't. Subsequent headlines continued pushing back on the notion of an easy peace deal until 3pm. At that point, Trump posted that a planned military operation for tomorrow was cancelled and that serious negotiations were now taking place between great leaders and allies, and
Bombarded by Headlines, But Little-Changed
Bombarded by Headlines, But Little-Changed Monday's trading session ended up being an exercise in headline-watching, as has been the case on so many days since the start of the Iran war. Today was more active than normal in that regard. The earliest headlines (as covered in the AM commentary) were helpful until they weren't. Subsequent headlines continued pushing back on the notion of an easy peace deal until 3pm. At that point, Trump posted that a planned military operation for tomorrow was cancelled and that serious negotiations were now taking place between great leaders and allies, and
18th May, 26
Mortgage Rates Start Week at New 9 Month High, But Just Barely
Mortgage rates hit their highest levels in more than 9 months at the end of last week. Now today, they've edged slightly higher yet again with the average top tier 30yr fixed rate at 6.68% versus 6.65% on Friday. This wasn't necessarily destined to be the case today. In fact the day began with the average lender unchanged. But the underlying market remains highly attuned to breaking news on the Iran war. Earlier in the day, that news was helpful for rates as it spoke to the possibility of compromise on a peace deal. Subsequent headlines refuted the initial news, thus pushing the financial
Mortgage Rates Start Week at New 9 Month High, But Just Barely
Mortgage rates hit their highest levels in more than 9 months at the end of last week. Now today, they've edged slightly higher yet again with the average top tier 30yr fixed rate at 6.68% versus 6.65% on Friday. This wasn't necessarily destined to be the case today. In fact the day began with the average lender unchanged. But the underlying market remains highly attuned to breaking news on the Iran war. Earlier in the day, that news was helpful for rates as it spoke to the possibility of compromise on a peace deal. Subsequent headlines refuted the initial news, thus pushing the financial