Just Another Bad Day For Bonds Without New Justification 10yr yields hit another long-term high today, breaking above 5.30% briefly before settling just under 5.29%. There was a flash of hope after the 8:30am econ data, but that reversed fairly quickly. Reasons can be debated. Some would say today's broadly stronger econ data supported it while pointing out that the "beat" in PCE wasn't really news in light of the methodology changes. On that note, some might say methodology that drops core PCE by 0.361 (July vs July unrounded) means that Fed policy will be less aggressive in fighting…
For a few moments this morning, it looked as if rates might buck the recent trend and recover a bit of ground today. The underlying bond market was fairly flat overnight and then managed to improve after this morning's PCE inflation data. But that improvement was short-lived. Top tier 30yr fixed rates jumped to 7.60%. That's only 0.02% higher than yesterday, but yet another long-term high. As frustrating as it continues to be, there are no convenient scapegoats for the reversal in terms of intraday news/data. Some small case could be made that the day's economic data wasn't exactly…
Time flies. The last day of the third quarter. We just wrapped up Fat Bear Week 2026 in Alaska. (Congrats to Backpack.) Ringo Starr is 86 years old, and doing well: clean living, being active, and a sense of humor. I mention this because when he was born, a letter was 3 cents to mail. Do companies still have mailrooms and mail bags? Let’s dip into my “electronic mail bag” and see what some readers are thinking about. “Rob, the Administration has a choice in housing: keep prices high and protect existing owners, or let prices fall and restore affordability for the next generation. You can’t do…
Core PCE came in at 0.2 vs a 0.3 forecast, and the bond market rallied a bit in response. That said, the unrounded number was .247, which about as high as it could be without rounding up to 0.3. Core annual PCE was 3.0, which was flat versus a downward revision from 3.3. More importantly, that downward revision wasn't mainly about new data collection showing lower prices, but rather a change in PCE methodology. Not all of the methodology change is transparent, but our best estimate is that a vast majority of the 0.3 downward revision was due to methodology changes (the math: 0.361…
Big Intraday Round Trip For Bonds; Williams Helped Bonds spent the first half of the day pressing into even weaker levels in spite of a respectable drop in oil prices. Data and headlines had little to no bearing on the selling. If anything, the biggest scapegoat is the combination of bearish momentum and quarter-end trading (something we're extrapolating from the mirror-image correlation between stocks and bond yields). 10yr yields crested 5.29% at their weakest levels--right in line with the only obvious nearby technical level from 2007. Bearishness reversed at 2pm when Fed Gov Williams said…
Mortgage rates moved higher again on Tuesday as the bond market continues recalibrating expectations for Fed policy, economic growth, and inflation. The weakness is especially frustrating considering a fairly large drop in oil prices today, but as we discussed yesterday, rates have a lot more on their mind than oil these days. Our top-tier 30yr fixed rate index rose from 7.50 to 7.58% today--the highest since November 1st, 2023. In this sense, mortgage rates are doing much better than their often-cited benchmark, the 10yr Treasury yield, which is the highest level since 2007. That's because…
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Bonds were initially modestly stronger overnight, but mostly sideways in the bigger picture. Right at the 8:20am CME open, bond sellers were clearly waiting in line to sell. This is another small anecdote that potentially suggests month/quarter-end trading is contributing to this week's volatility. It could also be an ongoing defensive stance ahead of this week's high-stakes econ data (this morning's JOLTs being today's most pressing example, coming up at 10am ET). The weakness completely ignored a fairly substantial drop in oil prices. We'll see more about what's what after 10am.
Bond-Specific Weakness Over the past 6 months, as bonds continued to sell off, there was frequently some solace in the fact that the rate spike correlated with oil or diesel prices enough to hope that an oil price recovery would pave the way for a rate recovery. While there's likely still some benefit for bonds from a large, sustained drop in oil prices, the broader disconnect is increasingly conspicuous. Today was the latest example. Yields appeared to track with oil on the way up (for the most part). But when oil reversed course and moved back to 'unchanged' on the day, bond yields were…
Despite Friday afternoon's promising bond market rally and mortgage rate improvement, today's top tier 30yr fixed rate bounced back up. The average lender is now at 7.50% for the first time since April 30, 2024. While there's been a lot of short-term correlation between oil prices and interest rates over the last 6 months, oil does a poor job of explaining much of the recent upward momentum in rates. At times today, it seemed that the higher rates coincided with higher oil prices, but oil fell all the way back to Friday afternoon's levels at one point while rates remained elevated. The…
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