AM Rally Completely Erased By The Close This morning's paradoxical rally lasted 30 whole minutes. Bonds turned around at exactly 9am and proceeded to completely erase the AM gains. There were no compelling macro motivations for the reversal apart from a modest rise in oil prices. While oil price lows and highs perfectly matched bond yields in terms of timing, the bond selling was disproportionately larger. This is highly suggestive of short covering being a component of the morning rally. In other words, traders who had open bets on higher rates simply closed those positions quickly this…
Looked at in a vacuum, and up until the last few hours of the day, Friday was no better or worse than the average day over the past several months. Compared to yesterday morning's levels, the average lender was 0.01% higher--a small enough move to be effectively considered "unchanged." This expanded to 0.05% in the last few hours as multiple lenders increased rates. In terms of big-picture benchmarks, the increase officially brings rates to their highest levels since early 2025. To be clear, we were just barely lower than May 2025 levels yesterday. Now we're in line February 2025…
Existing-home sales slipped in August, falling below the 4 million annualized pace for the first time since June 2025, while a sharp increase in inventory gave buyers more options and pushed the supply of homes to its highest level in more than a decade. The National Association of REALTORS® reported a 2.0% decline in sales from July to a seasonally adjusted annual rate of 3.98 million , while sales were 1.2% lower than a year earlier. “Mortgage rates and home sales move in opposite directions, so it's not surprising to see a mild dip in home buying activity due to high mortgage rates,” said…
Mortgage application activity pulled back last week, with a sharp decline in refinancing more than offsetting relatively stable purchase demand as mortgage rates moved higher. The Mortgage Bankers Association (MBA) reported a 2.7% decrease in total application volume on a seasonally adjusted basis for the week ending September 4. Purchase applications were little changed, slipping just 0.2% from the previous week on a seasonally adjusted basis. On an unadjusted basis, purchase activity fell 3%, but remained 4% higher than the same week one year ago, earning it's spot as the one positive note…
Most of us 30 years old and older have tales about where they were and what they did 25 years ago. Being in capital markets, and selling MBS, for over 40 years, I knew people who died in New York that day. That said, as an industry, we’re very good at looking forward to, and planning for, the future. Minority home ownership is something every major lender is witnessing. For example, on Monday, September 14, NAHREP and the Hispanic Wealth Project will unveil the 2026 State of Hispanic Wealth Report on Latino economic progress. More than 1.2 million Hispanic households have reached millionaire…
We've been saying for a while that the longer end of the bond market really wants to see the Fed get serious about fighting inflation. This is why yields spiked on July 29th when the Fed held rates steady and Warsh said he'd let the bond market do the heavy lifting. Now today, we have back-to-back inflation reports that resulted in Fed Funds Futures pricing in a 90% chance of a hike at next week's meeting. Fed Funds Futures are the only thing that's unequivocally selling off this morning. 2yr Treasuries (heavily impacted by Fed expectations) are mixed, but the longer end of the curve is now…
Ugly Snowball Selling Thanks to Oil and Inflation Data MBS lost nearly a full point by 4pm ET and 10yr yields were up 11.4bps at 4.95%. This is the highest since October 2023 when 10s briefly hit 5.006%. At one point in the overnight session, yields were slightly LOWER on the day. Things changed in waves. First wave: oil prices surged overnight and had already broken $100 but the time PPI came out. Second wave: PPI was roughly in line with forecasts, but internal components suggested a 0.1 increase to core PCE inflation. The reaction was the sharpest of the day for bonds. Third wave:…
You may have seen other headlines today that reference 30yr fixed rates of 6.76%. Those stories would be citing Freddie Mac's weekly rate survey which is an average of the 5 business days (4 in this case, due to the holiday) ending yesterday (September 9th). Because of that methodology, the number lags reality. Today alone, the average lender moved up 0.125% in rate. In addition, Freddie no longer accounts for "points" (additional money paid upfront for a lower rate). In other words, 6.75% with one point is roughly the same rate as 7.00% with no points. As a reminder, our daily rate…
Here in San Antonio, TX, interest rates are obviously part of mortgage event discussion. (On today’s The Big Picture Guild’s David Battany will be discussing rates and recent developments impacting them with Robbie C. and me.) Here’s what happens when you mix campaign promises, mortgage rates and the markets. Texas is a border state, obviously impacted by changes in immigration policy, especially when it comes to employment. Last Friday’s employment data showed strong job growth, but overall, a muddled picture. For example, the hiring rate is very low, and hiring is concentrated in…
It's been a rough couple of days for the bond market. Yesterday, it was Bessent and the reaction to the Treasury buyback announcement. Today it is an overnight surge in oil prices and a lackluster reaction to the Producer Price Index (PPI). PPI doesn't tend to move markets as much as CPI (due out tomorrow), but it certainly can for two reasons: on the rare occasions when it is released before CPI and when its components suggest an increase in PCE inflation. In other words, parts of the PPI data have a bearing on PCE and PCE is ultimately what matters most. The market doesn't always trade it…
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