MBS
Mortgage and refinance rates today, Feb. 27, and rate forecast for next week
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Today’s mortgage and refinance rates  Average mortgage rates fell a little or held steady yesterday (Friday). Unfortunately, it was the only glimmer of light in a gloomy week that saw […]
MBS RECAP: Video Time Corresponds With Market Drama (Today’s is 22 min.)
By admin | |

Posted To: MBS Commentary

Just When You Thought It Wouldn't Get Much Worse Staggeringly weak day for bonds. 2.0 MBS coupon is now irrelevant. 2.5 is only game in town Lots of general motivations to discuss (watch the video), but the 7yr auction was the only obvious moment for cause & effect Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Jobless Claims 730k vs 838k f'cast, 841k prev Durable Goods 3.4 vs 1.1 f'cast, 1.2 prev GDP (revision, q4) 4.1 vs 4.2 f'cast Market Movement Recap 09:10 AM Modestly weaker in Asia, then significantly weaker in Europe, with 10yr yields rising more than 8bps by the open (high yield = 1.468%). MBS are down 3/8ths after an incredibly illiquid 1st hour. Econ data didn't have a big impact. This is all bigger-picture momentum/snowball/technical trading. 10:58 AM...(read more)

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MBS RECAP: Nice Bounce! Now What?
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Posted To: MBS Commentary

Nice Bounce! Now What? - An early bounce turned into an even bigger, friendlier bounce at the end of the day - Biggest reason for the gains is the losses that preceded them (momentum/technicals/tradeflows) - Still following the 2.5 coupon - Still would like to see better confirmation of a new range with next week's trading (but yes, this is the most promising bounce of this cycle) - RECORD day for positive reprices Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Core PCE Price Index (y/y) 1.5 vs 1.4 f'cast, 1.4 prev Chicago PMI 59.5 vs 61.1 f'cast, 63.8 prev Market Movement Recap 08:39 AM Early supportive bounce in Asia with 10yr yields pushed as low as 1.45%. No major push-back in Europe. Very narrow in recent context. Small, positive reaction to tame inflation data at 8:30...(read more)

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MBS Day Ahead: Just When You Thought It Wouldn’t Get Much Worse
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Posted To: MBS Commentary

It got much worse. Bond yields were up more than 8bps by the open with the 10yr just a hair under 1.47%. It might be hard for traders to avoid ringing the 1.50% bell even if bonds manage to bounce today or in the next few days. The kicker is that the weakness lacks the sort of discrete, obvious headline/data motivations that make for satisfying levels of understanding. It continues to be a move driven by big-picture momentum, short-term stop-loss triggers, technicals, asset manager reallocations, month-end trading, convexity hedging, and other esoteric, behind-the-scenes factors. From a purely technical perspective, the additional weakness was a risk based on the breakout of the longstanding trend channel last week (yellow lines below). The risk now is that traders will aggressively try to...(read more)

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MBS RECAP: Is It Another Trap and Which Coupon Do I Watch Now?
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Posted To: MBS Commentary

Is It Another Trap and Which Coupon Do I Watch Now? Yesterday's bond market resilience offered hope for a bounce, but those hopes were crushed by new weakness this morning. The move took MBS to their worst levels since last March and Treasuries, since February 2020. Bonds recovered mid-day, begging the question: is this another trap? Do we just get crushed again tomorrow? Today's video discusses those prospects as well as the reasons for the shift to 2.5 UMBS 30yr fixed coupons. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm New Home Sales 923k va 855k f'cast, 885k prev 5yr auction: weak. 0.7bps higher than expected. Bid to cover 2.24 vs 2.45 avg Market Movement Recap 08:53 AM modestly stronger in Asia, moderately weaker in Europe, and now sharply weaker as the domestic session...(read more)

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MBS Day Ahead: It Was a Trap… Don’t Expect Stocks to Save Us
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Posted To: MBS Commentary

Yesterday saw yields hold at just slightly lower highs on an intraday basis, thus offering a glimmer of hope for a bond bounce. We discussed the risk that this was a trap, and so far today, it looks like it was. 10yr yields are over 1.4% and UMBS 2.5 coupons are now the only game in town. Where is that giant squid guy from Star Wars when you need him? The bond market weakness is sharper and more relentless than many market watchers anticipated. One common topic of conversation among those hoping for a bounce is the interplay between stocks and bonds. Late 2018 is fresh in our minds with widespread belief that "high rates" precipitated a stock sell-off which, in turn, helped rates move lower. I won't say "that's not what happened," because that dynamic was in play...(read more)

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MBS RECAP: Glimmer of Hope in Bonds, But It Might Be a Trap
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Posted To: MBS Commentary

Glimmer of Hope in Bonds, But It Might Be a Trap Bonds started the day in roughly unchanged territory and promptly began tanking. This was a bigger deal for MBS than Treasuries as the latter managed to stay UNDER yesterday's intraday high yields. Heavy losses in stocks at the NYSE open helped bonds a bit, but weakness returned ahead of Powell's congressional testimony. As Powell spoke, yields healed and bonds eventually turned green. This makes for a promising technical cue as far as charts are concerned, but for reasons discussed in today's video, it might make sense to wait for just a bit more convincing before shifting your lock/float approach in this market. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Case Shiller Home Prices (y/y) 10.1 vs 9.9 f'cast, 9.2 prev FHFA...(read more)

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MBS RECAP: Glimmer of Hope in Bonds, But It Might Be a Trap
By admin | |

Posted To: MBS Commentary

Glimmer of Hope in Bonds, But It Might Be a Trap Bonds started the day in roughly unchanged territory and promptly began tanking. This was a bigger deal for MBS than Treasuries as the latter managed to stay UNDER yesterday's intraday high yields. Heavy losses in stocks at the NYSE open helped bonds a bit, but weakness returned ahead of Powell's congressional testimony. As Powell spoke, yields healed and bonds eventually turned green. This makes for a promising technical cue as far as charts are concerned, but for reasons discussed in today's video, it might make sense to wait for just a bit more convincing before shifting your lock/float approach in this market. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Case Shiller Home Prices (y/y) 10.1 vs 9.9 f'cast, 9.2 prev FHFA...(read more)

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MBS RECAP: Rates Are In Big Trouble, But Why?
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Posted To: MBS Commentary

Huge Mortgage-Specific Weakness The rate reset continues. Just when you thought 10yr yields surely couldn't go any higher, they did. New intraday highs of 1.394% in 10yr yields, and closing near the 1.37% inflection point. MBS aren't happy about it. When rates spike this quickly, MBS typically have to undergo a fast and painful repositioning of relevant coupons. The current iteration has seen 2.5 UMBS take the place of 1.5 coupons in just a few short weeks. But even 2.5 coupons got killed today. Multiple lenders repriced for the worse--some of them more than once. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Leading Economic Indicators 0.5 vs 0.5 f'cast Market Movement Recap 08:40 AM Heavy selling overnight in Asia. 10's hit highs of 1.394. Better buying in Europe despite...(read more)

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MBS Week Ahead: Battle to Find a Rate Ceiling Continues
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Posted To: MBS Commentary

Bond yields have been surging higher in February with last week bringing the sharpest losses so far. The move has surprised more than a few market participants. To be sure, the pace of selling doesn't seem to fit with the economic reality at first glance. Moreover, the higher yields have gone, the more expectations have increased for a technical correction. In other words, we have to find a ceiling soon, even if it's only temporary. It looked like we found that ceiling in the middle of last week, but Friday saw yields break to new highs. Now as the new week begins, we have more new highs (overnight) and more new hope for a ceiling bounce as bonds are rallying early. On the data front, this week's headliners include Durable Goods, Core PCE, and the 5/7yr Treasury auctions. With the...(read more)

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