Could Have Been Better. Could Have Been Worse If the bond market was a Mario Bro, it found a gold star at some point on Wednesday. As Thursday afternoon, the gold star ran out of juice and we're back to regular old Mario. In other words, astonishing resilience/bullishness has been replaced by a sideways-to-slightly-weaker grind. It could be as simple as the desire among traders to consolidate recent gains without getting too carried away. Ongoing selling in tech stocks ostensibly allowed for another bond rally, so the fact that we lost a bit of ground could end up looking like an important…
If you're busy, we can make this quick. Existing home sales dropped sharply from over 6m units per year starting in 2022 and had bottomed out around 4m units per year by the end of 2023. They've done essentially nothing exciting since then and the latest update is no exception. The end. If you prefer to read an article-sized article, here you go: Existing-home sales edged higher in September with The National Association of REALTORS® reporting a 1.5% increase to a seasonally adjusted annual rate of 3.99 million . August and September mark the two slowest months for home sales this year,…
Mortgage applications continued to lose ground as mortgage rates held near their highest levels in nearly three years. The Mortgage Bankers Association (MBA) reported a 2.7% decline in total mortgage application volume for the week ending October 9. That's an important date, because a substantial majority of a fairly sharp decline in interest rates occurred AFTER October 9. As such, next week's data is a great opportunity to see the impact of lower rates. Purchase activity took another step back, with the seasonally adjusted Purchase Index falling 4% for the week and running 16% below…
After dropping sharply over the past 5 days, mortgage rates finally reminded us that they're still capable of moving higher. Thankfully, today's bump was modest in the recent context, only adding 0.04% to a 30yr fixed that had fallen 0.27% since October 7th. Even though today's losses were minimal, they're potentially informative. Much of this week's improvement can be traced to concerns surrounding tech companies, and possible warning signs about a reduction in AI-related spending/investment throughout the sector. While it's too early to draw any conclusions about such things, we…
The MBA believes that 2027’s production will be 5 percent less than 2026’s and be below $2 trillion. “Rob, are you hearing that, with volumes down (units and volume), lenders are once again examining keeping entire loan originator workforces?” Indeed I am. At the most basic level, as we move through autumn and into winter with no sign of greatly improved rates and the spring “home buying season” five months away, lenders are asking, “Is the LO carrying him/herself?” Lenders are moving LOs to part-time status, cutting benefits when possible, or suggesting they “find success elsewhere.” Many…
The past two days saw a unique confluence of factors that led to a precipitous, unexpected, and fairly large rally in the bond market. The easiest scapegoat is the general notion of fear surrounding AI/tech share prices and debt contagion. One simple effect was investors reallocating out of stocks and into bonds. Another effect could be investors shifting out of AI corporate debt into safer havens. Either way, it doesn't feel like a coincidence that tech stocks slid roughly 5% over the exact same time frame as the 10yr rallied from 5.34 to 5.07. If we use the QQQ ETF as a loose…
Mortgage rates dropped again today, and at a much faster pace than yesterday's decline. Top tier 30yr fixed rates are now down to 7.33% for the average lender, a drop of more than 0.25% from the long-term highs seen just last week. There are a lot of moving parts behind the scenes so let's focus on what we can know or at least reasonably conclude. [thirtyyearmortgagerates] Is this the big shift in rates we've been waiting for? The kind that sometimes follows sustained spikes to long-term highs? While there's a chance the past 5 days COULD serve as the early indication of a broader rate…
Exciting Times, But Don't Get Too Excited There's no question that the past 5 days have been the best 5 days that we've seen in a long time in terms of direction movement in rates. They're made all the more miraculous because the past 2 days included much higher inflation readings. In a vacuum, inflation data was bad for rates. But the opposing forces are/were stronger in this case. There are two to consider: AI/tech correction and bond seller exhaustion. We've said for a while that yields would eventually be high enough to prompt some value buying and that 5.34-5.35% may be 2026's version of…
“My coworker asked me how I’m doing this morning. Yet another third party trying to steal my data!” Data travels at the speed of light. Mickey D’s is reportedly using artificial intelligence to “dynamically” price its burgers. Imagine a lender trying that! AI filled the exhibition hall at the MBA’s conference this week. I don’t use AI to write this Commentary, but perhaps I should tack “AI” onto the end of it in case I want to raise money or attract more readers. On second thought, nah, we’re good as it is. But along those lines, AI is the focal point in today’s Chrisman LLC Demo Day, the…
Core PPI was up 0.7 vs 0.3 forecast this morning. That's something that would normally send yields much higher. But everything is different this morning. Bonds rallied sharply in the overnight session and added a bit more to the gains after the 8:30am data. This is on top of yesterday's stunning comeback after getting rocked by higher CPI. To a small extent, the "control group" Retail Sales number may have helped, but the 8:30am gains have more to do with investors waiting to see PPI and finding it would add less than 0.1% to PCE in 2 weeks. This allows the market to maintain its focus…
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