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12th September, 25
Incidental, Inconsequential Weakness Ahead of Fed Week
Incidental, Inconsequential Weakness Ahead of Fed Week Bonds began the day in modestly weaker territory and yields are heading out right where they started. In fact, yields are also right in line with the opening levels from Monday. This broadly suggests the market got where it was going after the jobs report and is now waiting for the next big shoe to drop. The other way to view this entire week is as an opportunity to book profits and cover shorts on the recent "steepening" trade (which favored buying 2s over 10s). Indeed, 2yr yields mostly sold off this week relative to 10s and
Incidental, Inconsequential Weakness Ahead of Fed Week
Incidental, Inconsequential Weakness Ahead of Fed Week Bonds began the day in modestly weaker territory and yields are heading out right where they started. In fact, yields are also right in line with the opening levels from Monday. This broadly suggests the market got where it was going after the jobs report and is now waiting for the next big shoe to drop. The other way to view this entire week is as an opportunity to book profits and cover shorts on the recent "steepening" trade (which favored buying 2s over 10s). Indeed, 2yr yields mostly sold off this week relative to 10s and
12th September, 25
Mortgage Rates Were Flat All Week No Matter What Other News Suggests
The underlying bond market (which dictates the rates offered by mortgage lenders) weakened moderately overnight. Weaker bonds equate to higher rates, all else equal. "Higher rates" is contrary to many media outlets' coverage this week, but there's an important reason. Most news organizations that cover mortgage rates rely on Freddie Mac's weekly rate survey for their once-a-week update. Additionally, when Freddie's rate raises/falls appreciably, it receives even more attention. This frequently creates problems due to the timing and methodology of Freddie's survey.
Mortgage Rates Were Flat All Week No Matter What Other News Suggests
The underlying bond market (which dictates the rates offered by mortgage lenders) weakened moderately overnight. Weaker bonds equate to higher rates, all else equal. "Higher rates" is contrary to many media outlets' coverage this week, but there's an important reason. Most news organizations that cover mortgage rates rely on Freddie Mac's weekly rate survey for their once-a-week update. Additionally, when Freddie's rate raises/falls appreciably, it receives even more attention. This frequently creates problems due to the timing and methodology of Freddie's survey.
12th September, 25
2nd, Database Mining, Manufactured Housing Products; Weak Job Market Impacting Rates?
“Rob, we’ve said ‘no’ to more expansion possibilities than ever before. Are you hearing other lenders doing deep dives on LOs and branches and also not seeing a profitable path?” Yes indeedy. Here in Jackson, MS, at the Mississippi Mortgage Banker’s Fall Conference, lenders are not only discussing expansion but also early payoff penalties and strategies to avoid them. (Of course, they are explaining to newer entrants why few investors would ever pay 102 or 104 for a loan that may pay off soon at 100.) One topic is why companies service, or sell service, and this month’s STRATMOR
2nd, Database Mining, Manufactured Housing Products; Weak Job Market Impacting Rates?
“Rob, we’ve said ‘no’ to more expansion possibilities than ever before. Are you hearing other lenders doing deep dives on LOs and branches and also not seeing a profitable path?” Yes indeedy. Here in Jackson, MS, at the Mississippi Mortgage Banker’s Fall Conference, lenders are not only discussing expansion but also early payoff penalties and strategies to avoid them. (Of course, they are explaining to newer entrants why few investors would ever pay 102 or 104 for a loan that may pay off soon at 100.) One topic is why companies service, or sell service, and this month’s STRATMOR
12th September, 25
Back in The Range After Failed Breakout Attempt
Bonds began the week with 10yr at 4.07 before rallying down to 4.04 by Monday's close. Now on Friday, we're opening at 4.06 and we haven't spent much time trading more than a few bps higher or lower than that for the entire week. Translation: apart from yesterday's attempt to challenge the 4.0% floor, it's been very sideways and uneventful. On the topic of the 4.0% floor, market technicians might be reading some significance into the repeated bounces yesterday amid higher volumes. But one need not be a technician to reconcile the mixed econ data and broad uncertainty with an
Back in The Range After Failed Breakout Attempt
Bonds began the week with 10yr at 4.07 before rallying down to 4.04 by Monday's close. Now on Friday, we're opening at 4.06 and we haven't spent much time trading more than a few bps higher or lower than that for the entire week. Translation: apart from yesterday's attempt to challenge the 4.0% floor, it's been very sideways and uneventful. On the topic of the 4.0% floor, market technicians might be reading some significance into the repeated bounces yesterday amid higher volumes. But one need not be a technician to reconcile the mixed econ data and broad uncertainty with an
11th September, 25
Very Calm Reaction But Not Too Surprising
Very Calm Reaction But Not Too Surprising One could argue that CPI is the next biggest potential market mover after the jobs report. With that in mind, it might seem surprising that MBS are heading out the door roughly unchanged and 10yr yields are down less than 3bps. It becomes less surprising when we consider inflation was mostly in line with expectations. Elevated unrounded core numbers were offset by decent drop in supercore (services excluding energy and shelter). When it comes to this morning's initial rally, we'd give more credit to supercore than we would to the pop in Jobless Claims
Very Calm Reaction But Not Too Surprising
Very Calm Reaction But Not Too Surprising One could argue that CPI is the next biggest potential market mover after the jobs report. With that in mind, it might seem surprising that MBS are heading out the door roughly unchanged and 10yr yields are down less than 3bps. It becomes less surprising when we consider inflation was mostly in line with expectations. Elevated unrounded core numbers were offset by decent drop in supercore (services excluding energy and shelter). When it comes to this morning's initial rally, we'd give more credit to supercore than we would to the pop in Jobless Claims
11th September, 25
Mortgage Rates Move Back to Long-Term Lows
Today's inflation report (the Consumer Price Index or CPI) certainly had a chance to create volatility for rates, but things ended up staying fairly calm. There are multiple subheadings of data that the bond market cares about when it come to CPI. Most of them were in line with expectations, or close enough to avoid surprising investors. The absence of surprise gave way to some improvement in bonds which, in turn, allowed mortgage lenders to start the day at just slightly lower levels. Additionally, a higher reading in this morning's weekly jobless claims report may have helped.
Mortgage Rates Move Back to Long-Term Lows
Today's inflation report (the Consumer Price Index or CPI) certainly had a chance to create volatility for rates, but things ended up staying fairly calm. There are multiple subheadings of data that the bond market cares about when it come to CPI. Most of them were in line with expectations, or close enough to avoid surprising investors. The absence of surprise gave way to some improvement in bonds which, in turn, allowed mortgage lenders to start the day at just slightly lower levels. Additionally, a higher reading in this morning's weekly jobless claims report may have helped.
11th September, 25
Slightly Stronger Start Despite Slightly Higher Inflation
It's an interesting morning for economic data and the bond market's reaction. At face value, CPI was mostly in line with forecasts, but unrounded numbers were a bit hot (i.e. core monthly CPI was 0.346%, almost high enough to make for a 0.4 vs 0.3 reading). Additionally, monthly headline inflation was 0.4 vs 0.3. These numbers, in and of themselves, wouldn't seem to suggest a bond rally. At the same moment, Jobless Claims printed at 263k vs a 235k forecast--the highest reading since 2021. The initial conclusion is that there is enough labor market concern to offset still-elevated
Slightly Stronger Start Despite Slightly Higher Inflation
It's an interesting morning for economic data and the bond market's reaction. At face value, CPI was mostly in line with forecasts, but unrounded numbers were a bit hot (i.e. core monthly CPI was 0.346%, almost high enough to make for a 0.4 vs 0.3 reading). Additionally, monthly headline inflation was 0.4 vs 0.3. These numbers, in and of themselves, wouldn't seem to suggest a bond rally. At the same moment, Jobless Claims printed at 263k vs a 235k forecast--the highest reading since 2021. The initial conclusion is that there is enough labor market concern to offset still-elevated
11th September, 25
Recapture, Compliance, Marketing, Warehouse Mgt. Tools; Webinars and Training This Week; 10-Year Yield Hits 4.00
“All I know is what I read in the papers,” Will Rogers quipped. In news in the papers from our Census Bureau, AI use at large companies is in decline. “A dip in corporate AI adoption isn't a great sign for an industry hellbent on world domination.” I am good at misunderestimating things, but will it go the way of blockchain (which is alive and simmering, but just not on the “front burner”)? This is a weak segue, but speaking of simmering, did you know that ChatGPT consumes an inordinately large amount of the world’s water supply? I wouldn’t say that AI or ChatGPT are fads, but
Recapture, Compliance, Marketing, Warehouse Mgt. Tools; Webinars and Training This Week; 10-Year Yield Hits 4.00
“All I know is what I read in the papers,” Will Rogers quipped. In news in the papers from our Census Bureau, AI use at large companies is in decline. “A dip in corporate AI adoption isn't a great sign for an industry hellbent on world domination.” I am good at misunderestimating things, but will it go the way of blockchain (which is alive and simmering, but just not on the “front burner”)? This is a weak segue, but speaking of simmering, did you know that ChatGPT consumes an inordinately large amount of the world’s water supply? I wouldn’t say that AI or ChatGPT are fads, but
10th September, 25
Helpful Data and Treasury Auction Set High Bar For CPI
Helpful Data and Treasury Auction Set High Bar For CPI Another fairly straightforward day for the bond market with friendly econ data and a strong 10yr Treasury auction both helping push yields lower. If it seems like the size of the miss in the PPI data justified a bigger move, consider the fact that it's an incredibly volatile data series. Additionally, last month's PPI created "base effect" issues (i.e. it was so high that today's -0.1% reading leaves the 2 month annualized level at 3.6%--still too high. Nonetheless, it was good enough news for bonds to push back against overnight weakness
Helpful Data and Treasury Auction Set High Bar For CPI
Helpful Data and Treasury Auction Set High Bar For CPI Another fairly straightforward day for the bond market with friendly econ data and a strong 10yr Treasury auction both helping push yields lower. If it seems like the size of the miss in the PPI data justified a bigger move, consider the fact that it's an incredibly volatile data series. Additionally, last month's PPI created "base effect" issues (i.e. it was so high that today's -0.1% reading leaves the 2 month annualized level at 3.6%--still too high. Nonetheless, it was good enough news for bonds to push back against overnight weakness
10th September, 25
Mortgage Rates Hold Steady With Help From Econ Data
Wednesday brought the first of this week's two key inflation reports. While the Producer Price Index (PPI) is the lesser of the two in terms of potential impact on rates, it came in far enough below expectations to make for a measurable improvement. The catch is that the improvement in question pertains to the underlying bond market. Before the data, bonds were slightly weaker, thus suggesting slightly higher rates. But lenders don't release their rates for the day until a few hours of trading have commenced. This leaves time for markets to react to early AM data such as today's
Mortgage Rates Hold Steady With Help From Econ Data
Wednesday brought the first of this week's two key inflation reports. While the Producer Price Index (PPI) is the lesser of the two in terms of potential impact on rates, it came in far enough below expectations to make for a measurable improvement. The catch is that the improvement in question pertains to the underlying bond market. Before the data, bonds were slightly weaker, thus suggesting slightly higher rates. But lenders don't release their rates for the day until a few hours of trading have commenced. This leaves time for markets to react to early AM data such as today's