Why Bonds Sold Off Despite Weaker Jobs Report First off, read the AM commentary if you haven't already. This recap doesn't add much to that (but the video adds a lot). Bottom line, NFP was weaker, but that was the worst of the news. The unrounded unemployment rate barely budged and it would have moved LOWER (under 4.00%) were it not for the uptick in labor force participation. Higher oil prices contributed a bit to intraday weakness as did a recovery in French credit spreads. At the end of the day, this wasn't the jobs report that sowed any seeds of doubt about cracks showing in the labor…
Mortgage demand shocked no one by declining last week as mortgage rates climbed to their highest level in nearly three years. The Mortgage Bankers Association (MBA) reported a 6% drop in total mortgage application volume for the week ending September 25. Both sides of the market moved lower, with the seasonally adjusted Purchase Index falling 4% and refinance applications dropping 9% . MBA said purchase and refinance activity both reached their slowest weekly pace since 2025 . Refinances always get hit hardest by rate spikes with the index now 56% lower than a year earlier. Government…
Home prices picked up a little more speed in July, as both FHFA and the S&P Cotality Case-Shiller Home Price Indices showed stronger annual appreciation than in their previous readings. The gains remain relatively modest by historical standards, and while nominal prices are still moving higher nationally, the picture looks considerably less impressive after accounting for inflation. The FHFA House Price Index rose 0.3% from June to July, bringing the annual increase to 2.6% . While the national market is still technically appreciating, there's more and more variation between different…
Mortgage rates rose 0.04% today to an index value of 7.57% for a top-tier 30yr fixed scenario for the average lender today. That uptick in and of itself isn't especially large, but it's a bit counterintuitive on a day where the hotly anticipated jobs report came in much weaker than expected. The jobs report has 2 key components: Nonfarm Payrolls (NFP) and the unemployment rate. For most of the time any rate watcher can remember, NFP matters way more. The market still reacts to it (which is why bonds initially improved this morning), but unemployment has arguably taken the lead in terms…
“A clear conscience is usually the sign of a bad memory.” How’s your memory of rates, and what you did when they moved higher? 30-year mortgage rates were about at this level, briefly, exactly three years ago, but before that we weren’t here since the late 1990’s when they were at these levels for a long time. How many of your sales staff were in the biz then? As the United States’ deficit continues to increase, 5-year Treasury securities, issued at 1 percent, are paying off and the U.S. Government is now having to pay 5 percent on new 5-year T-notes. At the Virginia Mortgage Bankers…
MBS are up more than 3/8ths and the 10yr is down almost 6bps at the lowest levels in a week after the job count came in at 29k vs 90k f'cast. That's the good news. But if it seems like the rally should be bigger for such a hotly anticipated report, there's a reason. First off, we need to remember that it takes fewer jobs created to keep unemployment stable these days. Even the Fed has said to focus more un the unemployment rate. In today's case, it only rose to 4.175% from 4.141% last month. Moreover, it did so despite the participation rate rising 0.2%. In other words, had it not been for…
Thursday's Rally Sets Up For a Very Interesting Friday Of course we had to have a big, interesting move in the bond market on the day before an economic report also famous for causing big, interesting moves. On such occasions, if Friday delivers on "interesting" it will either negate today's bullishness or add to it in a way that makes today retroactively look like an obvious near-term top in rates. There's no way to know enough about today's rally to conclude that--let alone the unknowable results of the jobs report and the ensuing reaction. All we know: today was a win. If more wins follow,…
It's a rarity these days, but mortgage rates actually moved lower today by more than a token amount. The average top-tier 30yr fixed rate fell to 7.54% from 7.60% yesterday. There are multiple potential factors in play when it comes to explaining the underlying bond market rally, but none of them stand out as an obvious singular motivation. For those curious, the list (which has several esoteric factors that we won't be fully explaining here) includes, but is not limited to: traders covering bets on higher rates ahead of tomorrow's jobs report concerns over European bond market contagion…
Welcome to the 4th quarter. Remember when, in 2024, the informal slogan for many in our biz was, “Stay alive ‘til ’25!”? (’27 isn’t expected to be heaven.) This is the month of Halloween. Suddenly residential lending is filled with tricks or treats, along with conferences of varying value. People are on the move: the jobs section of this Commentary has been filled with transitions and promotions. On a larger scale, the pace of company changes is picking up. Just when people are wondering if the shift into non-Agency products is becoming “long in the tooth,” New York Life Investment Management…
Sometimes we see a distinct shift in momentum on the first day of a new month. This is not one of those times. October 1st picks up where September 30th left off with more yield curve steepening (2yr and 10yr yield getting farther apart). This is a reflection of the sudden shift in economic data expectations last Wednesday combined with the fact that the Fed rate hike outlook has been broadly flat after Wednesday's pop. It's still anyone's game as far as today goes. 10s and MBS are moderately weaker while the 2yr is almost 5bps lower (anchored to those now-resilient Fed Funds Futures).…
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