Ugly Snowball Selling Thanks to Oil and Inflation Data MBS lost nearly a full point by 4pm ET and 10yr yields were up 11.4bps at 4.95%. This is the highest since October 2023 when 10s briefly hit 5.006%. At one point in the overnight session, yields were slightly LOWER on the day. Things changed in waves. First wave: oil prices surged overnight and had already broken $100 but the time PPI came out. Second wave: PPI was roughly in line with forecasts, but internal components suggested a 0.1 increase to core PCE inflation. The reaction was the sharpest of the day for bonds. Third wave:…
You may have seen other headlines today that reference 30yr fixed rates of 6.76%. Those stories would be citing Freddie Mac's weekly rate survey which is an average of the 5 business days (4 in this case, due to the holiday) ending yesterday (September 9th). Because of that methodology, the number lags reality. Today alone, the average lender moved up 0.125% in rate. In addition, Freddie no longer accounts for "points" (additional money paid upfront for a lower rate). In other words, 6.75% with one point is roughly the same rate as 7.00% with no points. As a reminder, our daily rate…
Here in San Antonio, TX, interest rates are obviously part of mortgage event discussion. (On today’s The Big Picture Guild’s David Battany will be discussing rates and recent developments impacting them with Robbie C. and me.) Here’s what happens when you mix campaign promises, mortgage rates and the markets. Texas is a border state, obviously impacted by changes in immigration policy, especially when it comes to employment. Last Friday’s employment data showed strong job growth, but overall, a muddled picture. For example, the hiring rate is very low, and hiring is concentrated in…
It's been a rough couple of days for the bond market. Yesterday, it was Bessent and the reaction to the Treasury buyback announcement. Today it is an overnight surge in oil prices and a lackluster reaction to the Producer Price Index (PPI). PPI doesn't tend to move markets as much as CPI (due out tomorrow), but it certainly can for two reasons: on the rare occasions when it is released before CPI and when its components suggest an increase in PCE inflation. In other words, parts of the PPI data have a bearing on PCE and PCE is ultimately what matters most. The market doesn't always trade it…
Bonds to Bessent: Challenge Accepted When the Yellen Treasury rolled out the buyback program in 2023/2024, they were careful to refer to it as strictly focused on liquidity and cash management. If they were secretly interested in influencing the yield curve, we'd never know. Contrast that to Bessent who specifically told reporters that long term rates were too high and that there was a "signaling component" to the recent decision to increase buybacks. Rhetoric ramped up further this morning when he said "I am the house now," and "you can bet against me if you want." The bond market's…
What do mortgage rates have to do with Treasuries? Quite a lot, actually. U.S. Treasuries are the bills and bonds issued by the government. In addition to financing government spending, they are also the lifeblood of the financial system. Due to that central role, their liquidity, the immense size of the market, and because they're considered to be "risk free," Treasuries also serve as the baseline for most other interest rates in the U.S. This isn't to say that mortgage lenders simply look at Treasury yields plus a margin to set mortgage rates. But the trading value of Treasuries has a…
What should we talk about today? Besides TSA bringing back gate access, here’s a leading IMB exec and his wife putting their Florida home on the market for “a pretty penny.” There’s talk at conferences, not only about things being slower than expected in 2026 and potentially even slower in 2027, but also of LO and branch movement. It reminds me of the adage, “If you came here for a signing bonus, you’re going to leave for a signing bonus.” In legal news, there’s Brian Levy's latest Mortgage Musing which summarizes the MBA's doctrinally strategic lawsuit launched late last week against New…
Not much is going on in terms of scheduled economic events until Thursday and Friday's PPI and CPI reports respectively. Those could be very big deals as some investors think the results will determine "hike vs hold" at next week's Fed meeting. Today's biggest to-do is probably the 11am announcement of the next round of Treasury buybacks. Treasury already announced that the 10-30yr buybacks would be $4 bn per operation, but Bessent subsequently said that was a minimum amount. He spoke again this morning, and literally said "I am the house now," and "you can bet against me if you want." Sounds…
Early Strength Gives Way to Steady Selling Bonds started the day in fairly good shape with a rally at the open and a certain measure of defiance of another jump in fuel prices. The defiance quickly gave way to underperformance--a fact that suggests short-term tradeflow considerations for the bond market or perhaps that we're simply putting the trading day under too much of a microscope. Either way, both yields and oil prices were higher by the end of the day although the 10yr avoided breaking above last week's highs. Market Movement Recap 08:30 AM Roughly unchanged after overnight volatility.…
Top tier 30yr fixed mortgage rates started the week right where they were on Friday for the average lender. At 6.89%, we're just a hair below the highest mark since June 2025. In general, rates have been increasing steadily since the Iran war ceasefire ended with the uptick frequently correlating with higher fuel prices. Today's "unchanged" rates require an asterisk. Although mortgage rates are based on bonds and although bonds move constantly throughout the day, mortgage lenders prefer to keep rate changes to a minimum--ideally once a day if the market remains calm enough. This means the…
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