Why Did Bonds Sell Off So Sharply Today? Bonds sold off fairly sharply today and the motivations transcended today's menu of market moving events. If we wanted to focus only that menu, it's main selections included Trump comments on the U.S. not needing a deal with Iran, a stronger showing in stocks, NVDA drama failing to tank tech stocks, and a bevy of hawkish Fed comments. To be fair, the selling perfectly aligned with Fed rate expectations for the middle of 2027, but our contention is that those expectations moved more quickly than the underlying motivations suggested. In order to round…
Thursdays are frequently "fun" in the world of mortgage rate reporting because that's when Freddie Mac releases its weekly rate survey. Despite updating its methodology several years ago, Freddie's survey still relies on rate quotes entered by humans and it is still an average of the 5 business days ending on the Wednesday of any given week. That means Freddie's survey result can be quite outdated on weeks with significant movement on Tue-Thu. Why should we care? Simply put, the Freddie survey has been around since the 70s and is still widely cited by many news agencies as the week's…
“What is the most common question Finnish detectives ask suspects? ‘What were you doing the night between November and May?’” There will be less daylight in the Northern Hemisphere until the Winter Solstice on December 21st, with lots of weather, and mortgage news, between now and then. Old mortgage vets recall the end of November as traditionally being the time that Freddie and Fannie announce their loan limits for the next year. Given the increase in non-Agency lending over the last few years, this has lost some of its significance, but it will still have a ripple effect through the…
Bonds began the overnight session in roughly unchanged territory and were mostly sideways until just after 8am when Trump said "we don't need a deal with Iran." Oil prices and bond yields spiked in response. There was a modest recovery in response to NVDA announcing Huang resigning as CEO but now more selling pressure as the NASDAQ recovers at the 9:30am NYSE open.
Is This The End of The Friendly Trend? Bonds weathered their biggest day of selling since September today and their only notable day of selling since the recent downtrend in rates began in mid-October. The blame game was simple: CPI was much higher than expected and there were no silver linings in the report's internal components. Multiple Fed speakers (including Warsh 2 weeks ago) have reiterated the Fed's focus on inflation as opposed to the labor market. Even before the data, Waller said a 0.3 core CPI reading could mean a 50bp rate hike in December (and 0.3 is what we got). Fed Funds…
Rates enjoyed a remarkably calm winning streak over the past month with the worst single day resulting in a 0.06% increase for a top tier 30yr fixed loan and the average day seeing a 0.02% decline. That streak was dealt its first serious blow today following a hotter than expected in the Consumer Price Index (CPI)--a key inflation report. Even though the Fed's official inflation target is based on Personal Consumption Expenditures (PCE), we'll be waiting another 2 weeks for that report to come out for the month of October. CPI (the one we got today) always comes out earlier in the month and…
“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…
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