Thursday's Rally Sets Up For a Very Interesting Friday Of course we had to have a big, interesting move in the bond market on the day before an economic report also famous for causing big, interesting moves. On such occasions, if Friday delivers on "interesting" it will either negate today's bullishness or add to it in a way that makes today retroactively look like an obvious near-term top in rates. There's no way to know enough about today's rally to conclude that--let alone the unknowable results of the jobs report and the ensuing reaction. All we know: today was a win. If more wins follow,…
It's a rarity these days, but mortgage rates actually moved lower today by more than a token amount. The average top-tier 30yr fixed rate fell to 7.54% from 7.60% yesterday. There are multiple potential factors in play when it comes to explaining the underlying bond market rally, but none of them stand out as an obvious singular motivation. For those curious, the list (which has several esoteric factors that we won't be fully explaining here) includes, but is not limited to: traders covering bets on higher rates ahead of tomorrow's jobs report concerns over European bond market contagion…
Welcome to the 4th quarter. Remember when, in 2024, the informal slogan for many in our biz was, “Stay alive ‘til ’25!”? (’27 isn’t expected to be heaven.) This is the month of Halloween. Suddenly residential lending is filled with tricks or treats, along with conferences of varying value. People are on the move: the jobs section of this Commentary has been filled with transitions and promotions. On a larger scale, the pace of company changes is picking up. Just when people are wondering if the shift into non-Agency products is becoming “long in the tooth,” New York Life Investment Management…
Sometimes we see a distinct shift in momentum on the first day of a new month. This is not one of those times. October 1st picks up where September 30th left off with more yield curve steepening (2yr and 10yr yield getting farther apart). This is a reflection of the sudden shift in economic data expectations last Wednesday combined with the fact that the Fed rate hike outlook has been broadly flat after Wednesday's pop. It's still anyone's game as far as today goes. 10s and MBS are moderately weaker while the 2yr is almost 5bps lower (anchored to those now-resilient Fed Funds Futures).…
Just Another Bad Day For Bonds Without New Justification 10yr yields hit another long-term high today, breaking above 5.30% briefly before settling just under 5.29%. There was a flash of hope after the 8:30am econ data, but that reversed fairly quickly. Reasons can be debated. Some would say today's broadly stronger econ data supported it while pointing out that the "beat" in PCE wasn't really news in light of the methodology changes. On that note, some might say methodology that drops core PCE by 0.361 (July vs July unrounded) means that Fed policy will be less aggressive in fighting…
For a few moments this morning, it looked as if rates might buck the recent trend and recover a bit of ground today. The underlying bond market was fairly flat overnight and then managed to improve after this morning's PCE inflation data. But that improvement was short-lived. Top tier 30yr fixed rates jumped to 7.60%. That's only 0.02% higher than yesterday, but yet another long-term high. As frustrating as it continues to be, there are no convenient scapegoats for the reversal in terms of intraday news/data. Some small case could be made that the day's economic data wasn't exactly…
Time flies. The last day of the third quarter. We just wrapped up Fat Bear Week 2026 in Alaska. (Congrats to Backpack.) Ringo Starr is 86 years old, and doing well: clean living, being active, and a sense of humor. I mention this because when he was born, a letter was 3 cents to mail. Do companies still have mailrooms and mail bags? Let’s dip into my “electronic mail bag” and see what some readers are thinking about. “Rob, the Administration has a choice in housing: keep prices high and protect existing owners, or let prices fall and restore affordability for the next generation. You can’t do…
Core PCE came in at 0.2 vs a 0.3 forecast, and the bond market rallied a bit in response. That said, the unrounded number was .247, which about as high as it could be without rounding up to 0.3. Core annual PCE was 3.0, which was flat versus a downward revision from 3.3. More importantly, that downward revision wasn't mainly about new data collection showing lower prices, but rather a change in PCE methodology. Not all of the methodology change is transparent, but our best estimate is that a vast majority of the 0.3 downward revision was due to methodology changes (the math: 0.361…
Big Intraday Round Trip For Bonds; Williams Helped Bonds spent the first half of the day pressing into even weaker levels in spite of a respectable drop in oil prices. Data and headlines had little to no bearing on the selling. If anything, the biggest scapegoat is the combination of bearish momentum and quarter-end trading (something we're extrapolating from the mirror-image correlation between stocks and bond yields). 10yr yields crested 5.29% at their weakest levels--right in line with the only obvious nearby technical level from 2007. Bearishness reversed at 2pm when Fed Gov Williams said…
Mortgage rates moved higher again on Tuesday as the bond market continues recalibrating expectations for Fed policy, economic growth, and inflation. The weakness is especially frustrating considering a fairly large drop in oil prices today, but as we discussed yesterday, rates have a lot more on their mind than oil these days. Our top-tier 30yr fixed rate index rose from 7.50 to 7.58% today--the highest since November 1st, 2023. In this sense, mortgage rates are doing much better than their often-cited benchmark, the 10yr Treasury yield, which is the highest level since 2007. That's because…
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