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9th March, 26
Big Round Trip in Oil Prices and Bond Yields
Big Round Trip in Oil Prices and Bond Yields There was no denying the spillover from oil price volatility to the bond market this morning, even if it took quite a lot of the former to move the latter. At its apex, the oil surge was the largest daily move on record at over $26/bbl (just over a 28% jump). This translated to a 10yr yield jump of almost 8bps to start the overnight session. But things were already reversing course quickly by the time European trading began. Then, by the start of U.S. trading, 10yr yields were already back below 4.18% and continued to fall back to
Big Round Trip in Oil Prices and Bond Yields
Big Round Trip in Oil Prices and Bond Yields There was no denying the spillover from oil price volatility to the bond market this morning, even if it took quite a lot of the former to move the latter. At its apex, the oil surge was the largest daily move on record at over $26/bbl (just over a 28% jump). This translated to a 10yr yield jump of almost 8bps to start the overnight session. But things were already reversing course quickly by the time European trading began. Then, by the start of U.S. trading, 10yr yields were already back below 4.18% and continued to fall back to
9th March, 26
Mortgage Rates Finish Flat After Starting Higher
Mortgage rates began the day at the highest levels in a month. The move up versus Friday was only moderate, but Friday's levels were already fairly close to early Feb's highs. Oil prices continue putting upward pressure on rates, but with several caveats. It takes quite a big move in oil to motivate enough movement in the bond market to impact mortgage rates. With this morning's spike being the largest on record at the time, today certainly qualified. But over the course of the day, both oil and bonds reversed course, thus allowing the average lender to adjust rates back in line with Friday's
Mortgage Rates Finish Flat After Starting Higher
Mortgage rates began the day at the highest levels in a month. The move up versus Friday was only moderate, but Friday's levels were already fairly close to early Feb's highs. Oil prices continue putting upward pressure on rates, but with several caveats. It takes quite a big move in oil to motivate enough movement in the bond market to impact mortgage rates. With this morning's spike being the largest on record at the time, today certainly qualified. But over the course of the day, both oil and bonds reversed course, thus allowing the average lender to adjust rates back in line with Friday's
9th March, 26
Non-QM, Default Support, DSCR Products; Events; Which Lenders are Refinancing; Interview on Compass
One of the conversation topics late last week in Deer Valley is the weather and climate, and more specifically that Salt Lake City had received virtually no snow this winter, which means that places like Atlanta and Charlotte have received more snow than a city at 4,300 feet elevation. Syracuse, New York has received nearly 5 feet of snow so far this year. Ever heard of Commonspace in Syracuse? As another affordable alternative, it’s a “cohousing” community in a restored 19th century office building made up of 25 mini apartments help affordability and that remind me a lot of my college
Non-QM, Default Support, DSCR Products; Events; Which Lenders are Refinancing; Interview on Compass
One of the conversation topics late last week in Deer Valley is the weather and climate, and more specifically that Salt Lake City had received virtually no snow this winter, which means that places like Atlanta and Charlotte have received more snow than a city at 4,300 feet elevation. Syracuse, New York has received nearly 5 feet of snow so far this year. Ever heard of Commonspace in Syracuse? As another affordable alternative, it’s a “cohousing” community in a restored 19th century office building made up of 25 mini apartments help affordability and that remind me a lot of my college
9th March, 26
Biggest Oil Spike Yet Leaves No Doubts
Since the outbreak of the military operation in Iran, there have been varying levels of spillover from rising oil prices to the bond market. There have been notable pockets of time where the correlation broke down, but when viewed in less granular detail, oil prices and bond yields have moved higher together over the past week. Now this morning, there's a new mega-surge in oil (presumably due to Iran's leadership announcement and its implications for more military escalation) and the correlation is undeniable when viewed over a short time period. Today's first chart shows there's no
Biggest Oil Spike Yet Leaves No Doubts
Since the outbreak of the military operation in Iran, there have been varying levels of spillover from rising oil prices to the bond market. There have been notable pockets of time where the correlation broke down, but when viewed in less granular detail, oil prices and bond yields have moved higher together over the past week. Now this morning, there's a new mega-surge in oil (presumably due to Iran's leadership announcement and its implications for more military escalation) and the correlation is undeniable when viewed over a short time period. Today's first chart shows there's no
6th March, 26
Oil Impact Ultimately Shunned in Favor of Jobs Report Implications
Oil Impact Ultimately Shunned in Favor of Jobs Report Implications It was a super interesting day for the bond market. Yields rose to the week's highs overnight as oil prices continued to surge. We knew we'd get at least some sort of reaction to any big beat/miss in the jobs report and today's miss was certainly big. At first, the reaction was logical. Bond rallied. But the paradox set in quickly and yields hit new highs by 9:30am. Fed funds futures continued arguing for a bond rally, as did lowest S&P levels since November. One could say "bonds finally came to their senses," or "the
Oil Impact Ultimately Shunned in Favor of Jobs Report Implications
Oil Impact Ultimately Shunned in Favor of Jobs Report Implications It was a super interesting day for the bond market. Yields rose to the week's highs overnight as oil prices continued to surge. We knew we'd get at least some sort of reaction to any big beat/miss in the jobs report and today's miss was certainly big. At first, the reaction was logical. Bond rallied. But the paradox set in quickly and yields hit new highs by 9:30am. Fed funds futures continued arguing for a bond rally, as did lowest S&P levels since November. One could say "bonds finally came to their senses," or "the
6th March, 26
Volatile Crosscurrents Keep Mortgage Rates Relatively Flat
Before this morning's jobs report was released, mortgage rates were on track to end the week at their highest levels in several weeks. This was due to an ongoing mega-spike in oil prices spilling over to the bond market (higher oil = higher inflation implications, and bonds hate inflation). The jobs report saved the day, albeit in a morbid way. It was one of the weakest jobs reports in years with unemployment continuing to trend higher and the job count falling deeply into negative territory. The jobs market is the only thing as important to bonds as inflation, and job market weakness tends to
Volatile Crosscurrents Keep Mortgage Rates Relatively Flat
Before this morning's jobs report was released, mortgage rates were on track to end the week at their highest levels in several weeks. This was due to an ongoing mega-spike in oil prices spilling over to the bond market (higher oil = higher inflation implications, and bonds hate inflation). The jobs report saved the day, albeit in a morbid way. It was one of the weakest jobs reports in years with unemployment continuing to trend higher and the job count falling deeply into negative territory. The jobs market is the only thing as important to bonds as inflation, and job market weakness tends to
6th March, 26
Highest Refi Demand in 4 Years After Last Week's Rate Rally
Mortgage application activity surged last week in response to headlines of mortgage rates stably holding multi-year lows. The Mortgage Bankers Association (MBA) reported an increase of 11.0% on a seasonally adjusted basis for the week ending February 27. Refi applications once again led the charge, jumping 14.3% from the previous week and 109% higher vs the same week one year ago. Conventional refi apps rose 20% for the week, marking the fourth consecutive weekly increase and the strongest pace since 2022. Purchase demand also strengthened. The seasonally adjusted Purchase Index increased 6.1
Highest Refi Demand in 4 Years After Last Week's Rate Rally
Mortgage application activity surged last week in response to headlines of mortgage rates stably holding multi-year lows. The Mortgage Bankers Association (MBA) reported an increase of 11.0% on a seasonally adjusted basis for the week ending February 27. Refi applications once again led the charge, jumping 14.3% from the previous week and 109% higher vs the same week one year ago. Conventional refi apps rose 20% for the week, marking the fourth consecutive weekly increase and the strongest pace since 2022. Purchase demand also strengthened. The seasonally adjusted Purchase Index increased 6.1
6th March, 26
Verification Tool; Company and Training Webinars at Home; Capital Markets; Oil-Driven Inflation?
Officially winter ends on 3/19, as the Spring Equinox is 3/20. Most modern clocks these days auto-update when daylight savings begins/ends. So, Sunday morning I’ll be walking around my house thinking, “Wow... times have changed.” This Sunday many places will be changing their clocks and springing ahead. This will, once again, lead to the public asking politicians to do away with changing clocks, with stories of bad traffic and grumpy students. For something new, the Federal Reserve Board announced the termination of its 2018 enforcement action against Wells Fargo, following its
Verification Tool; Company and Training Webinars at Home; Capital Markets; Oil-Driven Inflation?
Officially winter ends on 3/19, as the Spring Equinox is 3/20. Most modern clocks these days auto-update when daylight savings begins/ends. So, Sunday morning I’ll be walking around my house thinking, “Wow... times have changed.” This Sunday many places will be changing their clocks and springing ahead. This will, once again, lead to the public asking politicians to do away with changing clocks, with stories of bad traffic and grumpy students. For something new, the Federal Reserve Board announced the termination of its 2018 enforcement action against Wells Fargo, following its
6th March, 26
Massive Miss in NFP. So Why Aren't Bonds Improving?
It's shaping up to be a frustrating day market watchers. Decades of experience tells us that bonds should rally fairly sharply on a day where nonfarm payrolls miss the forecast by the widest margin in more than a year. At -92k vs +59k, today fits that bill. And like you'd expect, bonds rallied sharply right at 8:30am ET. But the rally was short-lived and it's not a huge surprise. That's not a hindsight assessment either. It was actually our first analytical reaction. Reason being: the unemployment rate carries more weight than NFP these days, and it was only up to 4.4% from 4
Massive Miss in NFP. So Why Aren't Bonds Improving?
It's shaping up to be a frustrating day market watchers. Decades of experience tells us that bonds should rally fairly sharply on a day where nonfarm payrolls miss the forecast by the widest margin in more than a year. At -92k vs +59k, today fits that bill. And like you'd expect, bonds rallied sharply right at 8:30am ET. But the rally was short-lived and it's not a huge surprise. That's not a hindsight assessment either. It was actually our first analytical reaction. Reason being: the unemployment rate carries more weight than NFP these days, and it was only up to 4.4% from 4
5th March, 26
Dueling Narratives Leave Yields Higher Ahead of Jobs Report
Dueling Narrative Leave Yields Higher Ahead of Jobs Report In the overnight session yields followed oil prices higher, but notably, Treasuries continued to sell even after oil leveled off. Then during domestic hours, it was Treasuries' turn to level off while oil prices spiked. From 9am to 2pm, oil rose nearly $5/bbl while Treasury yields remained completely flat. One way to justify this would be via safe-haven demand from heavy stock losses, but we continue not loving that explanation because it is even less reliably correlated than bonds vs oil. At this point, we're simply hoping that
Dueling Narratives Leave Yields Higher Ahead of Jobs Report
Dueling Narrative Leave Yields Higher Ahead of Jobs Report In the overnight session yields followed oil prices higher, but notably, Treasuries continued to sell even after oil leveled off. Then during domestic hours, it was Treasuries' turn to level off while oil prices spiked. From 9am to 2pm, oil rose nearly $5/bbl while Treasury yields remained completely flat. One way to justify this would be via safe-haven demand from heavy stock losses, but we continue not loving that explanation because it is even less reliably correlated than bonds vs oil. At this point, we're simply hoping that