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14th November, 25
Gains Completely Erased; Stocks Looking More Culpable
Gains Completely Erased; Stocks Looking More Culpable Viewed in a vacuum, this mornings 7-8am rally remains enigmatic. There was some small case to be made that stock losses played a role, but the bond buying definitely didn't line up with stocks in a normal way (i.e. it looked like there was some third variable that caused the bond rally to play out in a much more concentrated way). But as the day progressed, we saw stronger evidence of correlation between stock prices and bond yields. Specifically, a sharp rebound in stocks at the 9:30am NYSE open coincided with an equally sharp reversal in
Gains Completely Erased; Stocks Looking More Culpable
Gains Completely Erased; Stocks Looking More Culpable Viewed in a vacuum, this mornings 7-8am rally remains enigmatic. There was some small case to be made that stock losses played a role, but the bond buying definitely didn't line up with stocks in a normal way (i.e. it looked like there was some third variable that caused the bond rally to play out in a much more concentrated way). But as the day progressed, we saw stronger evidence of correlation between stock prices and bond yields. Specifically, a sharp rebound in stocks at the 9:30am NYSE open coincided with an equally sharp reversal in
14th November, 25
Rates Rise on Friday, Now Near 2-Month Highs
Mortgage rates were only modestly higher on Friday, but because of the narrow prevailing range and previous increases this week, that brings us right in line with 2-month highs. Bonds (which dictate rates) began the day with promise. There was heavy buying (good for rates) in the 7am hour. This coincided with stocks challenging their lowest levels in weeks. But both stocks and bonds bounced back in the 9am hour. Bonds ultimately erased all of the morning's gains and, thus, the hope for today's mortgage rates to be lower than yesterday's.
Rates Rise on Friday, Now Near 2-Month Highs
Mortgage rates were only modestly higher on Friday, but because of the narrow prevailing range and previous increases this week, that brings us right in line with 2-month highs. Bonds (which dictate rates) began the day with promise. There was heavy buying (good for rates) in the 7am hour. This coincided with stocks challenging their lowest levels in weeks. But both stocks and bonds bounced back in the 9am hour. Bonds ultimately erased all of the morning's gains and, thus, the hope for today's mortgage rates to be lower than yesterday's.
14th November, 25
Purchase Demand Near Best Levels Since January 2023
Mortgage applications posted a modest increase last week, even as rates ticked slightly higher. According to MBA’s Weekly Applications Survey for the week ending November 7, total volume rose 0.6% on a seasonally adjusted basis and dipped 1% unadjusted. The Refinance Index fell 3% from the previous week but remains 147% higher than the same week one year ago. Despite the pullback, refi activity is still running at levels far stronger than anything seen in 2023 or 2024. Larger-balance borrowers continue to drive the category, though rising rates led to the smallest average refinance loan size
Purchase Demand Near Best Levels Since January 2023
Mortgage applications posted a modest increase last week, even as rates ticked slightly higher. According to MBA’s Weekly Applications Survey for the week ending November 7, total volume rose 0.6% on a seasonally adjusted basis and dipped 1% unadjusted. The Refinance Index fell 3% from the previous week but remains 147% higher than the same week one year ago. Despite the pullback, refi activity is still running at levels far stronger than anything seen in 2023 or 2024. Larger-balance borrowers continue to drive the category, though rising rates led to the smallest average refinance loan size
14th November, 25
HELOC, Meeting Software, MSR Valuation Tools; M&A for Servicing; Extension Cost Primer; Freddie and Fannie Price Fixing?
I always wonder, when I see two gas stations near each other in a small town, if the owners agree on pricing and share information. But when you’re dealing with trillions of dollars of mortgages and millions of borrowers, well, that’s a different scale, and the leader and boards of directors should be held responsible if the news is correct. Per the AP, “A confidant of Bill Pulte, the Trump administration’s top housing regulator, provided confidential mortgage pricing data from Fannie Mae to (Freddie Mac), alarming senior officials of the government-backed lending giant who warned it
HELOC, Meeting Software, MSR Valuation Tools; M&A for Servicing; Extension Cost Primer; Freddie and Fannie Price Fixing?
I always wonder, when I see two gas stations near each other in a small town, if the owners agree on pricing and share information. But when you’re dealing with trillions of dollars of mortgages and millions of borrowers, well, that’s a different scale, and the leader and boards of directors should be held responsible if the news is correct. Per the AP, “A confidant of Bill Pulte, the Trump administration’s top housing regulator, provided confidential mortgage pricing data from Fannie Mae to (Freddie Mac), alarming senior officials of the government-backed lending giant who warned it
14th November, 25
Stronger Start After 7am Magical Mystery Move
Bonds were sideways to slightly weaker in the overnight session. 4am to 7am was exceptionally flat and narrow. This is notable because stocks had done more than half of their overnight selling by 7am, and stocks are one of the only scapegoats. In other words, a "flight to safety" (sell stocks/buy bonds) seems to be the only popular explanation, and it's entirely unsatisfying when looking at stocks and bonds on a chart. Our official take is: there's a secret club and we're not in it. There are some straws we could grasp at, but feel less compelled to do so when the magical
Stronger Start After 7am Magical Mystery Move
Bonds were sideways to slightly weaker in the overnight session. 4am to 7am was exceptionally flat and narrow. This is notable because stocks had done more than half of their overnight selling by 7am, and stocks are one of the only scapegoats. In other words, a "flight to safety" (sell stocks/buy bonds) seems to be the only popular explanation, and it's entirely unsatisfying when looking at stocks and bonds on a chart. Our official take is: there's a secret club and we're not in it. There are some straws we could grasp at, but feel less compelled to do so when the magical
13th November, 25
Moderately Weaker With Only The Reopening to Blame
Moderately Weaker With Only The Reopening to Blame The government reopened on Thursday. Both stocks and bonds sold off moderately in response. The bond market weakness is in line with our expectations for a confirmed reopening based on the simple logic that a prolonged shutdown would have been increasingly detrimental to economic growth. Comments from a few Fed speakers added fuel to the fire by calling a December rate cut into question. That said, assuming the big-ticket econ data is back up and running by then, the outcome of those reports will likely add clarity to rate cut
Moderately Weaker With Only The Reopening to Blame
Moderately Weaker With Only The Reopening to Blame The government reopened on Thursday. Both stocks and bonds sold off moderately in response. The bond market weakness is in line with our expectations for a confirmed reopening based on the simple logic that a prolonged shutdown would have been increasingly detrimental to economic growth. Comments from a few Fed speakers added fuel to the fire by calling a December rate cut into question. That said, assuming the big-ticket econ data is back up and running by then, the outcome of those reports will likely add clarity to rate cut
13th November, 25
Mortgage Rates Near The Top of Recent Range
Mortgage rates rose somewhat sharply following the late October Fed meeting but have been in a relatively narrow range so far in November. The range is so narrow, in fact, that yesterday's average rate was at the bottom of that range while today's rate is closer to the highs. Given the minimal overall movement, there's no compelling need to account for underlying market motivations. To be sure, there was no new economic data that caused weakness in the underlying bond market. That leaves only the reopening of the government as a scapegoat. Several days ago, when the end of the shutdown
Mortgage Rates Near The Top of Recent Range
Mortgage rates rose somewhat sharply following the late October Fed meeting but have been in a relatively narrow range so far in November. The range is so narrow, in fact, that yesterday's average rate was at the bottom of that range while today's rate is closer to the highs. Given the minimal overall movement, there's no compelling need to account for underlying market motivations. To be sure, there was no new economic data that caused weakness in the underlying bond market. That leaves only the reopening of the government as a scapegoat. Several days ago, when the end of the shutdown
13th November, 25
Data Intelligence, CTP Products; Compliance Warning About Thanksgiving; Another Fed President to Leave
In news underwriters will need to know, banks and satirists across the United States are taking Director Bill Pulte’s and President Donald Trump’s 50-year mortgage suggestion are running with it. They (the underwriters) would now require an applicant's grandkids to co-sign on a 50-year mortgage "just in case” as part of the approval equation. What happens when you leave out a key part of the equation? (Skip ahead to the two-minute mark for another chuckle.) The IT staffs of lenders and vendors are always on guard not to leave out any part of any equation, and they may have some interest
Data Intelligence, CTP Products; Compliance Warning About Thanksgiving; Another Fed President to Leave
In news underwriters will need to know, banks and satirists across the United States are taking Director Bill Pulte’s and President Donald Trump’s 50-year mortgage suggestion are running with it. They (the underwriters) would now require an applicant's grandkids to co-sign on a 50-year mortgage "just in case” as part of the approval equation. What happens when you leave out a key part of the equation? (Skip ahead to the two-minute mark for another chuckle.) The IT staffs of lenders and vendors are always on guard not to leave out any part of any equation, and they may have some interest
13th November, 25
Shutdown is Over. Don't Get Excited
First off, the market expected a shutdown resolution by mid November and especially since this past weekend. That's the reason today's news means essentially nothing in terms of being a surprise headline. On the data front, today is also meaningless in the short term. It's not as if the backlog of econ data will suddenly be released. The only exception is the September jobs report, which could still be released this week since it was largely ready to go before the shutdown. As for the initial reaction in bonds, it's been modestly weaker, as expected, but not weak enough
Shutdown is Over. Don't Get Excited
First off, the market expected a shutdown resolution by mid November and especially since this past weekend. That's the reason today's news means essentially nothing in terms of being a surprise headline. On the data front, today is also meaningless in the short term. It's not as if the backlog of econ data will suddenly be released. The only exception is the September jobs report, which could still be released this week since it was largely ready to go before the shutdown. As for the initial reaction in bonds, it's been modestly weaker, as expected, but not weak enough
12th November, 25
Bonds Look Past 10yr Auction to Maintain Focus on Jobs
Bonds Look Past 10yr Auction to Maintain Focus on Jobs While there were no big ticket economic reports on today's calendar, bonds came into the session with a tailwind from yesterday's weekly ADP payrolls data. Unlike the monthly numbers seen in last week's monthly ADP report (which showed a +42k increase in payrolls), yesterday's weekly numbers showed an 11k decline so far in November. Treasury futures (not closed for the holiday) reacted clearly and immediately. As a result, 10yr yields opened nearly 5bps lower this morning and managed to hold those gains throughout the session. Traders had
Bonds Look Past 10yr Auction to Maintain Focus on Jobs
Bonds Look Past 10yr Auction to Maintain Focus on Jobs While there were no big ticket economic reports on today's calendar, bonds came into the session with a tailwind from yesterday's weekly ADP payrolls data. Unlike the monthly numbers seen in last week's monthly ADP report (which showed a +42k increase in payrolls), yesterday's weekly numbers showed an 11k decline so far in November. Treasury futures (not closed for the holiday) reacted clearly and immediately. As a result, 10yr yields opened nearly 5bps lower this morning and managed to hold those gains throughout the session. Traders had