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15th September, 25
Uneventful Rally. Retail Sales on Deck
Uneventful Rally. Retail Sales on Deck Bonds began the week on a stronger note, but not for any glaringly obvious reasons. The same was said about Friday's weakness, so perhaps we'll just call it a wash and assume that traders are getting into (or out of) position(s) ahead of this week's Fed Day. Thus morning's NY Fed Manufacturing data fit the rally narrative, but most of the gains were in place beforehand--not to mention the limited track record of impact from that report. Volumes were exceptionally light and volatility was exceptionally low after the initial gains in the AM. Tuesday's
Uneventful Rally. Retail Sales on Deck
Uneventful Rally. Retail Sales on Deck Bonds began the week on a stronger note, but not for any glaringly obvious reasons. The same was said about Friday's weakness, so perhaps we'll just call it a wash and assume that traders are getting into (or out of) position(s) ahead of this week's Fed Day. Thus morning's NY Fed Manufacturing data fit the rally narrative, but most of the gains were in place beforehand--not to mention the limited track record of impact from that report. Volumes were exceptionally light and volatility was exceptionally low after the initial gains in the AM. Tuesday's
15th September, 25
Mortgage Rates Start Week at Another Long-Term Low
Mortgage rates have done almost nothing but move lower over the past 4 months. The first Fridays in August and September account for about half of the total drop thanks to weaker results in the jobs report. Since the September 5th jobs report, rates have held a sideways-to-slightly lower range that's resulted in several additional "lowest since" headlines. There's nothing special about today in that regard. Bonds (which dictate rates) happened to improve, so rates inched to another 11+ month low. Today's levels aren't appreciably different than last Friday's. Volatility is a bigger risk
Mortgage Rates Start Week at Another Long-Term Low
Mortgage rates have done almost nothing but move lower over the past 4 months. The first Fridays in August and September account for about half of the total drop thanks to weaker results in the jobs report. Since the September 5th jobs report, rates have held a sideways-to-slightly lower range that's resulted in several additional "lowest since" headlines. There's nothing special about today in that regard. Bonds (which dictate rates) happened to improve, so rates inched to another 11+ month low. Today's levels aren't appreciably different than last Friday's. Volatility is a bigger risk
15th September, 25
Insurance Co. Investor, UAD 3.6, RON, Personal Branding Tools; TPO Product; Disaster News
“Someone posted that they had just made synonym buns. I replied, ‘You mean just like the ones that grammar used to make?’ I am now blocked.” That was sent to me by an economist; yes, they have senses of humor. Did you know that the Federal Reserve Board employs more than 500 researchers, including more than 400 Ph.D. economists, who represent an exceptionally diverse range of interests and specific areas of expertise? (I wonder if anyone yells, “Is there a doctor in the house?” at staff meetings.) This week’s focus will be almost entirely on the Federal Reserve. The central bank'
Insurance Co. Investor, UAD 3.6, RON, Personal Branding Tools; TPO Product; Disaster News
“Someone posted that they had just made synonym buns. I replied, ‘You mean just like the ones that grammar used to make?’ I am now blocked.” That was sent to me by an economist; yes, they have senses of humor. Did you know that the Federal Reserve Board employs more than 500 researchers, including more than 400 Ph.D. economists, who represent an exceptionally diverse range of interests and specific areas of expertise? (I wonder if anyone yells, “Is there a doctor in the house?” at staff meetings.) This week’s focus will be almost entirely on the Federal Reserve. The central bank'
15th September, 25
Slow, Slightly Stronger Start to a Potentially Volatile Week
For all the time we spend pushing back on the notion that the Fed Funds Rate is a root cause for volatility in longer-term rates, that push-back always carries a notable caveat: Fed Funds Rate expectations definitely have a direct correlation with longer-term rates. There are two reasons those expectations can change: markets are either assuming the change due to economic data or markets are reacting to a change in the Fed's reaction function. Fed speeches and especially the quarterly dot plot (a summary of each Fed member's base case rate expectations) account for changes in the reaction
Slow, Slightly Stronger Start to a Potentially Volatile Week
For all the time we spend pushing back on the notion that the Fed Funds Rate is a root cause for volatility in longer-term rates, that push-back always carries a notable caveat: Fed Funds Rate expectations definitely have a direct correlation with longer-term rates. There are two reasons those expectations can change: markets are either assuming the change due to economic data or markets are reacting to a change in the Fed's reaction function. Fed speeches and especially the quarterly dot plot (a summary of each Fed member's base case rate expectations) account for changes in the reaction
12th September, 25
Incidental, Inconsequential Weakness Ahead of Fed Week
Incidental, Inconsequential Weakness Ahead of Fed Week Bonds began the day in modestly weaker territory and yields are heading out right where they started. In fact, yields are also right in line with the opening levels from Monday. This broadly suggests the market got where it was going after the jobs report and is now waiting for the next big shoe to drop. The other way to view this entire week is as an opportunity to book profits and cover shorts on the recent "steepening" trade (which favored buying 2s over 10s). Indeed, 2yr yields mostly sold off this week relative to 10s and
Incidental, Inconsequential Weakness Ahead of Fed Week
Incidental, Inconsequential Weakness Ahead of Fed Week Bonds began the day in modestly weaker territory and yields are heading out right where they started. In fact, yields are also right in line with the opening levels from Monday. This broadly suggests the market got where it was going after the jobs report and is now waiting for the next big shoe to drop. The other way to view this entire week is as an opportunity to book profits and cover shorts on the recent "steepening" trade (which favored buying 2s over 10s). Indeed, 2yr yields mostly sold off this week relative to 10s and
12th September, 25
Mortgage Rates Were Flat All Week No Matter What Other News Suggests
The underlying bond market (which dictates the rates offered by mortgage lenders) weakened moderately overnight. Weaker bonds equate to higher rates, all else equal. "Higher rates" is contrary to many media outlets' coverage this week, but there's an important reason. Most news organizations that cover mortgage rates rely on Freddie Mac's weekly rate survey for their once-a-week update. Additionally, when Freddie's rate raises/falls appreciably, it receives even more attention. This frequently creates problems due to the timing and methodology of Freddie's survey.
Mortgage Rates Were Flat All Week No Matter What Other News Suggests
The underlying bond market (which dictates the rates offered by mortgage lenders) weakened moderately overnight. Weaker bonds equate to higher rates, all else equal. "Higher rates" is contrary to many media outlets' coverage this week, but there's an important reason. Most news organizations that cover mortgage rates rely on Freddie Mac's weekly rate survey for their once-a-week update. Additionally, when Freddie's rate raises/falls appreciably, it receives even more attention. This frequently creates problems due to the timing and methodology of Freddie's survey.
12th September, 25
2nd, Database Mining, Manufactured Housing Products; Weak Job Market Impacting Rates?
“Rob, we’ve said ‘no’ to more expansion possibilities than ever before. Are you hearing other lenders doing deep dives on LOs and branches and also not seeing a profitable path?” Yes indeedy. Here in Jackson, MS, at the Mississippi Mortgage Banker’s Fall Conference, lenders are not only discussing expansion but also early payoff penalties and strategies to avoid them. (Of course, they are explaining to newer entrants why few investors would ever pay 102 or 104 for a loan that may pay off soon at 100.) One topic is why companies service, or sell service, and this month’s STRATMOR
2nd, Database Mining, Manufactured Housing Products; Weak Job Market Impacting Rates?
“Rob, we’ve said ‘no’ to more expansion possibilities than ever before. Are you hearing other lenders doing deep dives on LOs and branches and also not seeing a profitable path?” Yes indeedy. Here in Jackson, MS, at the Mississippi Mortgage Banker’s Fall Conference, lenders are not only discussing expansion but also early payoff penalties and strategies to avoid them. (Of course, they are explaining to newer entrants why few investors would ever pay 102 or 104 for a loan that may pay off soon at 100.) One topic is why companies service, or sell service, and this month’s STRATMOR
12th September, 25
Back in The Range After Failed Breakout Attempt
Bonds began the week with 10yr at 4.07 before rallying down to 4.04 by Monday's close. Now on Friday, we're opening at 4.06 and we haven't spent much time trading more than a few bps higher or lower than that for the entire week. Translation: apart from yesterday's attempt to challenge the 4.0% floor, it's been very sideways and uneventful. On the topic of the 4.0% floor, market technicians might be reading some significance into the repeated bounces yesterday amid higher volumes. But one need not be a technician to reconcile the mixed econ data and broad uncertainty with an
Back in The Range After Failed Breakout Attempt
Bonds began the week with 10yr at 4.07 before rallying down to 4.04 by Monday's close. Now on Friday, we're opening at 4.06 and we haven't spent much time trading more than a few bps higher or lower than that for the entire week. Translation: apart from yesterday's attempt to challenge the 4.0% floor, it's been very sideways and uneventful. On the topic of the 4.0% floor, market technicians might be reading some significance into the repeated bounces yesterday amid higher volumes. But one need not be a technician to reconcile the mixed econ data and broad uncertainty with an
11th September, 25
Very Calm Reaction But Not Too Surprising
Very Calm Reaction But Not Too Surprising One could argue that CPI is the next biggest potential market mover after the jobs report. With that in mind, it might seem surprising that MBS are heading out the door roughly unchanged and 10yr yields are down less than 3bps. It becomes less surprising when we consider inflation was mostly in line with expectations. Elevated unrounded core numbers were offset by decent drop in supercore (services excluding energy and shelter). When it comes to this morning's initial rally, we'd give more credit to supercore than we would to the pop in Jobless Claims
Very Calm Reaction But Not Too Surprising
Very Calm Reaction But Not Too Surprising One could argue that CPI is the next biggest potential market mover after the jobs report. With that in mind, it might seem surprising that MBS are heading out the door roughly unchanged and 10yr yields are down less than 3bps. It becomes less surprising when we consider inflation was mostly in line with expectations. Elevated unrounded core numbers were offset by decent drop in supercore (services excluding energy and shelter). When it comes to this morning's initial rally, we'd give more credit to supercore than we would to the pop in Jobless Claims
11th September, 25
Mortgage Rates Move Back to Long-Term Lows
Today's inflation report (the Consumer Price Index or CPI) certainly had a chance to create volatility for rates, but things ended up staying fairly calm. There are multiple subheadings of data that the bond market cares about when it come to CPI. Most of them were in line with expectations, or close enough to avoid surprising investors. The absence of surprise gave way to some improvement in bonds which, in turn, allowed mortgage lenders to start the day at just slightly lower levels. Additionally, a higher reading in this morning's weekly jobless claims report may have helped.
Mortgage Rates Move Back to Long-Term Lows
Today's inflation report (the Consumer Price Index or CPI) certainly had a chance to create volatility for rates, but things ended up staying fairly calm. There are multiple subheadings of data that the bond market cares about when it come to CPI. Most of them were in line with expectations, or close enough to avoid surprising investors. The absence of surprise gave way to some improvement in bonds which, in turn, allowed mortgage lenders to start the day at just slightly lower levels. Additionally, a higher reading in this morning's weekly jobless claims report may have helped.
