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12th August, 26
Bonds End Flat After Front-Running The Decent Data
Bonds End Flat After Front-Running The Decent Data We absolutely hate the term "front-running" because it can be perceived as connoting some measure of clairvoyance on the part of the bond market. To be clear, that's not the contention here. Rather, we noted that bonds were trading somewhat optimistically yesterday in that they outperformed their typical correlation with oil prices. That theme continued overnight and promptly ended when CPI came out right in line with forecasts. There are several ways to reconcile this turn of events, but one of the easiest is to speculate that traders indeed
Bonds End Flat After Front-Running The Decent Data
Bonds End Flat After Front-Running The Decent Data We absolutely hate the term "front-running" because it can be perceived as connoting some measure of clairvoyance on the part of the bond market. To be clear, that's not the contention here. Rather, we noted that bonds were trading somewhat optimistically yesterday in that they outperformed their typical correlation with oil prices. That theme continued overnight and promptly ended when CPI came out right in line with forecasts. There are several ways to reconcile this turn of events, but one of the easiest is to speculate that traders indeed
12th August, 26
Mortgage Rates Back at 3 Week Lows
Mortgage lenders set rates around 10am ET every day, but the bond market dictates the day to day changes, and bonds were on the move throughout the overnight trading hours. Granted, the movement wasn't extreme, but much like yesterday, it suggested a bit of optimism heading into this morning's main event: the release of July's Consumer Price Index (CPI). CPI is one of the two big inflation reports on any given month (the other being PCE) and it has more potential to cause a reaction because it comes out 2 weeks before PCE. Given that last month's CPI showed a sharp drop in inflation and
Mortgage Rates Back at 3 Week Lows
Mortgage lenders set rates around 10am ET every day, but the bond market dictates the day to day changes, and bonds were on the move throughout the overnight trading hours. Granted, the movement wasn't extreme, but much like yesterday, it suggested a bit of optimism heading into this morning's main event: the release of July's Consumer Price Index (CPI). CPI is one of the two big inflation reports on any given month (the other being PCE) and it has more potential to cause a reaction because it comes out 2 weeks before PCE. Given that last month's CPI showed a sharp drop in inflation and
12th August, 26
Asset-Based Loan, Loss Mit, Verification, AI-Native Execution; On-Site Events for your Calendar; Inflation Data
One of the panels during this year’s California MBA Western Secondary focused on the ramp up of non-Agency/equity lending. Why has it increased as a portion of the overall residential origination pie? It is attributed to a changing economy and changing borrowers, along with record equity. Add in the high percentage of borrowers who have first-lien mortgage rates below 5 percent (the “lock in effect”). There’s consumer pressure (high debt), equity extraction, the 40 percent of owners don’t have a mortgage, so owners are levering. From Freddie and Fannie’s perspective, the Agencies
Asset-Based Loan, Loss Mit, Verification, AI-Native Execution; On-Site Events for your Calendar; Inflation Data
One of the panels during this year’s California MBA Western Secondary focused on the ramp up of non-Agency/equity lending. Why has it increased as a portion of the overall residential origination pie? It is attributed to a changing economy and changing borrowers, along with record equity. Add in the high percentage of borrowers who have first-lien mortgage rates below 5 percent (the “lock in effect”). There’s consumer pressure (high debt), equity extraction, the 40 percent of owners don’t have a mortgage, so owners are levering. From Freddie and Fannie’s perspective, the Agencies
12th August, 26
No Major Reaction to As-Expected CPI
It would have been hard for CPI to be any more boring. All key metrics came in perfectly in line with forecasts. Supercore (core minus housing), was 0.189, which is a monthly equivalent of "close enough to the 2.0% target." Core CPI itself was 0.215%, which extrapolates to 2.58% year-over-year. The volume response let's us know that traders were indeed ready to trade this data, but logically, it's hard to make a case for a directional bias when everything in the report was so bland. In other news, bonds rallied overnight, so "flat after CPI" means we're holding moderate gains.
No Major Reaction to As-Expected CPI
It would have been hard for CPI to be any more boring. All key metrics came in perfectly in line with forecasts. Supercore (core minus housing), was 0.189, which is a monthly equivalent of "close enough to the 2.0% target." Core CPI itself was 0.215%, which extrapolates to 2.58% year-over-year. The volume response let's us know that traders were indeed ready to trade this data, but logically, it's hard to make a case for a directional bias when everything in the report was so bland. In other news, bonds rallied overnight, so "flat after CPI" means we're holding moderate gains.
11th August, 26
Bonds Looking Somewhat Optimistic Ahead of CPI
Bonds Looking Somewhat Optimistic Ahead of CPI Bonds improved modestly on Tuesday which is actually a somewhat resilient/optimistic showing. The ongoing correlation with oil prices suggested less improvement (oil actually closed higher on the day). In addition, it's usually less of a surprise to see bonds struggle to rally on the first half of an auction cycle week. Granted, a spicy CPI on Wednesday would easily push back against any optimistic narratives, but if the data is tame, perhaps we're seeing hints that bonds would be more willing to respond than normal. Market Movement Recap 09
Bonds Looking Somewhat Optimistic Ahead of CPI
Bonds Looking Somewhat Optimistic Ahead of CPI Bonds improved modestly on Tuesday which is actually a somewhat resilient/optimistic showing. The ongoing correlation with oil prices suggested less improvement (oil actually closed higher on the day). In addition, it's usually less of a surprise to see bonds struggle to rally on the first half of an auction cycle week. Granted, a spicy CPI on Wednesday would easily push back against any optimistic narratives, but if the data is tame, perhaps we're seeing hints that bonds would be more willing to respond than normal. Market Movement Recap 09
11th August, 26
Mortgage Rates Sideways to Slightly Higher
It ended up being a remarkably uneventful day for mortgage rates. Some lenders were slightly higher than yesterday. Others were roughly unchanged. The difference came down to whether the lender in question raised rates yesterday afternoon. What does this mean? Lenders prefer to set rates once per day around 10am ET. But if the underlying bond market makes a big enough move, lenders can change rates during the day. Bonds lost just enough ground yesterday for some lenders to raise rates. Contrast that to today where virtually every lender maintained the same levels throughout. Tomorrow morning
Mortgage Rates Sideways to Slightly Higher
It ended up being a remarkably uneventful day for mortgage rates. Some lenders were slightly higher than yesterday. Others were roughly unchanged. The difference came down to whether the lender in question raised rates yesterday afternoon. What does this mean? Lenders prefer to set rates once per day around 10am ET. But if the underlying bond market makes a big enough move, lenders can change rates during the day. Bonds lost just enough ground yesterday for some lenders to raise rates. Contrast that to today where virtually every lender maintained the same levels throughout. Tomorrow morning
11th August, 26
HELOC, AI Processing Tools; STRATMOR on Subservicing; MISMO Role; RESPA Thoughts
What are folks talking about here at the Western Secondary? Small things and big things. There’s a brand-spankin’ new private MI company: Anza. (Contact Melissa Gemma with questions.) Lenders are doing interesting things to help communities: for example, here’s Fairway Independent not leaving a dry eye in the house. That UWM has filed a lawsuit in federal court regarding the Two Harbor/CrossCountry deal is no surprise, although $500 million is attention-grabbing. China unleashes $28 trillion (yeah, with a “t”) capital markets to challenge the United States. We’ve heard about
HELOC, AI Processing Tools; STRATMOR on Subservicing; MISMO Role; RESPA Thoughts
What are folks talking about here at the Western Secondary? Small things and big things. There’s a brand-spankin’ new private MI company: Anza. (Contact Melissa Gemma with questions.) Lenders are doing interesting things to help communities: for example, here’s Fairway Independent not leaving a dry eye in the house. That UWM has filed a lawsuit in federal court regarding the Two Harbor/CrossCountry deal is no surprise, although $500 million is attention-grabbing. China unleashes $28 trillion (yeah, with a “t”) capital markets to challenge the United States. We’ve heard about
11th August, 26
Stronger Start on Yet Another Peace Deal Teaser
Bonds are rallying, and we have no objection to that. Reasons are simple and familiar enough that there's no sense in over-analyzing them. Newswires hit at 7am saying that Pakistan's defense minister said "things are shaping up in favor of peace" and that Pakistan's interior minister Khawaja Asif arrived in Tehran to discuss "matters of mutual interest." Oil prices and bond yields are well versed in cautious reactions to such headlines. They're not ever going to cause a massive reaction, but just like the last 40-50 examples, they're enough for a noticeable but modest shift in trading levels.&
Stronger Start on Yet Another Peace Deal Teaser
Bonds are rallying, and we have no objection to that. Reasons are simple and familiar enough that there's no sense in over-analyzing them. Newswires hit at 7am saying that Pakistan's defense minister said "things are shaping up in favor of peace" and that Pakistan's interior minister Khawaja Asif arrived in Tehran to discuss "matters of mutual interest." Oil prices and bond yields are well versed in cautious reactions to such headlines. They're not ever going to cause a massive reaction, but just like the last 40-50 examples, they're enough for a noticeable but modest shift in trading levels.&
10th August, 26
Issuance and Oil Strike Back
Issuance and Oil Strike Back Oil prices continue to ebb and flow in concert with the Iran war news cycle. There's no set schedule for such things, but there have been several Mondays where that narrative shifts in the opposite direction from wherever we left off at the end of the previous week. Last Wednesday was a recent low for oil and prices have risen since then. Today's increase was a bit of an acceleration so it's no surprise to see bond yields follow. Bonds also saw some mid-day pressure from an active corporate debt issuance landscape, but it's just as fair to say both
Issuance and Oil Strike Back
Issuance and Oil Strike Back Oil prices continue to ebb and flow in concert with the Iran war news cycle. There's no set schedule for such things, but there have been several Mondays where that narrative shifts in the opposite direction from wherever we left off at the end of the previous week. Last Wednesday was a recent low for oil and prices have risen since then. Today's increase was a bit of an acceleration so it's no surprise to see bond yields follow. Bonds also saw some mid-day pressure from an active corporate debt issuance landscape, but it's just as fair to say both
10th August, 26
Mortgage Rates Rise Modestly From 3 Week Lows
As of last Friday, average top-tier mortgage rates hit their lowest levels since July 20th. If they'd managed to drop even 0.01% today, it would have been a new 3-week low. As it stands, rates moved modestly higher in response to higher oil prices. Throughout the Iran war, oil and rates have had a broadly strong correlation because oil informs inflation expectations and inflation is a key input for the rate market. Even after today's rise, rates remain much closer to the lower end of the range over the past 3 weeks. Logically, any positive developments in the war or diplomacy should
Mortgage Rates Rise Modestly From 3 Week Lows
As of last Friday, average top-tier mortgage rates hit their lowest levels since July 20th. If they'd managed to drop even 0.01% today, it would have been a new 3-week low. As it stands, rates moved modestly higher in response to higher oil prices. Throughout the Iran war, oil and rates have had a broadly strong correlation because oil informs inflation expectations and inflation is a key input for the rate market. Even after today's rise, rates remain much closer to the lower end of the range over the past 3 weeks. Logically, any positive developments in the war or diplomacy should