Little-Moved by Huge Drop in Oil and Tech Stocks Bonds were technically stronger at 4pm ET, but just barely. Over the past 2 sessions, we've seen Treasury yields noticeably disconnect from the prevailing correlation with tech stocks. This began after the opening bell last Friday and mostly continued today. Bonds were generally improving while the NASDAQ was higher for most of the day and then sold off starting at 1pm when tech stocks saw their biggest losses (i.e. the opposite of the prevailing correlation). Part of the credit for the bond selling goes to the market's takeaway from…
It was a perfectly fine day for mortgage rates to start the new week. The underlying bond market improved modestly, drawing on a combination of sharply lower oil prices and another drop in tech-related stocks. While it's true that oil prices haven't had a reliable impact on bonds/rates over the past month, today's drop was big enough that is probably helped to some extent, especially when we consider some headwinds created by updated borrowing estimates released by the U.S. Treasury today. Once per quarter, Treasury updates estimated Treasury auction amounts. Treasuries are the foundation of…
Sometimes you and your teammates have different priorities. I head to Dallas tomorrow for a private mortgage event, where the priorities will probably be mostly aligned. Besides the election, and perhaps the inflation-beating Costco’s Thanksgiving meal, the profitability of HELOCs, 2nd mortgages, and equity products in general will definitely be a discussion topic. In the past much of this product (85 percent by some estimates) was held by banks. Now that is estimated to be down to 65 percent, and non-banks of all shapes and sizes are coming on strong, market-share-wise. Besides having decent…
Bonds were initially a hair weaker at the start of the overnight session, but rallied gradually after that. The sharpest gains arrived at the 9:30am NYSE open, suggesting money manager reallocations and "new month" trades. ISM Manufacturing hit 30 minutes later and the first reaction was modest bounce toward slightly higher yields and slightly higher stock prices. Perhaps the most notable development is that stocks are back up to Friday morning's levels even as bonds remain 4-5bps lower compared to the same baseline.
Bonds Almost Able to Break Even Thanks to Tech Turmoil Tech stocks embarked on a wild ride starting with earnings releases after the bell yesterday. While today's recap title mentions "breaking even," if we were to measure today's bond market movement versus yesterday's 3pm ET levels, 10yr yields are more than 5bps lower. In other words, those earnings releases created a big late-day rally yesterday and today became largely about trying to hold onto the gains. By mid-day, bonds were a bit weaker with 10yr yields approaching 4.96%. Around 1240pm, news broke regarding Anthropic being unlikely…
New home sales lost almost no ground in September, effectively reinforcing the healthy rebound seen in August's report. The Census Bureau's New Residential Construction report clocked sales at an annual pace of 676k, down only 0.6% month over month. As seen in the chart below, the broader trend has been sideways for nearly 3 years now. The number of new houses for sale slipped to 476,000 , down 1.0% from August and 2.3% from a year earlier. With inventory edging lower alongside sales, the implied supply eased to 8.4 months , compared with 8.5 months in August and 8.2 months last…
Home price appreciation picked up again in August (as reported this week), but the improvement was minimal. The FHFA House Price Index rose 0.3% from July to August, bringing annual appreciation to 2.4% . July's previously reported monthly gain was revised down from 0.3% to 0.2%. Regional results remained uneven, with annual appreciation ranging from 0.5% in the Mountain division to 4.4% in the East North Central division. Case-Shiller's national index rose 2.1% year over year, up from 1.9% in July. The 10-City Composite gained 3.6% , while the 20-City Composite rose 2.7% . Even with…
Mortgage applications finally rebounded as mortgage rates fell for a second straight week. The Mortgage Bankers Association (MBA) reported a 3.4% increase in total application volume for the week ending October 23. The average 30-year fixed mortgage rate declined to 7.37% from 7.41%, its lowest level in three weeks. Both purchase and refinance applications moved higher, but just barely, and well below levels from last year. The seasonally adjusted Purchase Index rose 4% for the week, and still 18% below year-ago levels . Refinances increased 3%, offering only a modest rebound from a market…
The rate market continues taking cues from turmoil in the tech sector. That resulted in the lowest rates in more than a month today as tech stocks slide to their lowest levels since July. The biggest shift for the underlying bond market (bonds dictate rates) came just before 1pm on reports that Anthropic's post IPO credit rating was not likely to be "investment grade." That matters because it means Anthropic would face higher borrowing costs. Given the company's key role in driving the AI buildout, there are two implications that helped bonds/rates today. First, higher borrowing…
As companies around the nation stage in-person or virtual costume contests, here’s some information for you a little off the beaten path. People want to own a home (“no one grows up wanting to be a renter”) regardless of… the amount of daylight? Looking at averages in the Continental United States (not Alaska or Hawaii), the difference between the amount of daylight on the first day of summer and the first day of winter is 5 ½ hours, “cushioned” by adjusting our timepieces. As much of the nation prepares to “fall back” this Sunday, talk again has come up about Congress eliminating this…
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