“I found a 95 year old painting in my attic. I asked him to leave.” Humor aside, many people have been asked to leave places like Fannie Mae, Freddie Mac, Go Mortgage, Onity, and others. It isn’t surprising, and the reductions are, in fact, a sign of the times given the time of year and the rate environment. That said, “finding success elsewhere” might just be what happens for those cut, and other lenders are using sources like RETR, mLoop, MMI, and Model Match (this list is by no means exhaustive) to take granular looks at LOs and their fundings, extension, price concessions, and…
Some inflation reports have counterpoints even if they appear high at first glance. This one is just all-around not great for bonds. It would be a genuine surprise to see a meaningful reversal from this morning's weakness without a major, unexpected news headline or massive stock sell-off. Really the only way someone could try to find a silver lining would be to say that month-over-month inflation moved a hair lower in a few key categories, but considering last month's report saw very high readings in those categories, that silver might actually be a lightning bolt. As a reminder, there…
Bonds Looking Increasingly Comfortable With Recent Gains Much like last Friday, the stock market provided adequate cover for bonds to give back a decent chunk of recent gains. And much like Friday, bonds opted to hold fairly steady. Granted, there was certainly weakness after the 9:30am NYSE open, but not as much as you might expect given that stocks retraced more than half of last Thursday's losses. Part of the explanation could be due to lower oil prices, both in the overnight session and then again following war-related headlines in the 2pm ET hour.
Last Thursday's stock market sell-off was a key factor in driving mortgage rates to the lowest levels in more than a month. More broadly, tech stock jitter have clearly correlated with multi-week trend toward lower rates that began in mid-October. As such, any time we see a pronounced bounce in stocks, we might be somewhat concerned about a similar bounce in rates. Stocks definitely bounced today with both the S&P and NASDAQ retracing more than half of the losses seen last Thursday. Mortgage rates dropped 0.05% on Thursday, but are only 0.01% higher today. One potential…
All of you out there wishing there were fewer people on the roads or in line at the post office, take heart. Lenders with a long time horizon, not so much. Apparently, even paradise is having trouble keeping its population up: The Census Bureau released updated projections through 2100 for 25 countries and U.S. territories, revealing that population declines in American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands are already underway and expected to continue through the century, alongside updated data for more than 16,600 regions worldwide. That doesn’t bode so well…
In the bigger picture, today offers little by way of actionable new info for the bond market. Unsurprisingly, volatility is being dictated by a decently big bounce in equities. Stocks were sideways to slightly stronger overnight, but have jumped somewhat sharply at the 9:30am NYSE open. Roughly half of last Thursday's rout has now been erased. Bonds weren't nearly as eager to move on Thursday relative to stocks and the same is true so far this morning. Tomorrow's CPI is the first major test this week. As for tail risk, a big enough bounce in stocks would likely not be great for bonds, if it…
Very Strong Showing For Bonds Considering The Headwinds There were two major headwinds in play for the bond market today. Most obviously, the jobs report was very strong--something that would normally push rates logically and obviously higher. One can only run through a list of potential explanations to fit that paradoxical result (unemployment rate wasn't as far from forecasts, election impact still being weighed, tech stocks didn't bounce big, stale data if mid-October marked a shift in economic momentum) but mind you, no one would have pointed to these things as reasons for bonds to…
Today was an odd one for mortgage rates. Anyone who's been following the rate market for very long will tell you that the monthly jobs report is one of the most reliable source of volatility for rates. In general, when job growth is much stronger than expected, rates rise and vice versa. But in today's case, rates managed to hold perfectly flat despite the jobs report absolutely crushing expectations. Understand that no one who is offering a reason for this would have predicted this result if they knew the jobs numbers ahead of time and were simply asked to predict how rates would react. In…
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Nonfarm payrolls came in 100k higher than forecast and the unemployment dropped even as the participation rate moved higher. That's a recipe for a bond market sell-off if we ever saw one. But apart from an initial knee-jerk sell-off, yields returned back in line with pre-NFP levels within 8 minutes and haven't moved much since then. What gives? Well... we expect that this is one of those days where market commentators are forced to adapt their narrative to the trading as opposed to hoping the trading would validate their narrative. One caveat is that professional/biz services…
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