Posted To: MBS CommentarySolid Afternoon Bounce, But Context Matters There’s surely some great analogy to be made about perspective (filed under the “everything’s relative” category). Bonds rallied quite nicely today with 10yr yields have their best domestic trading session since before the last Fed announcement. MBS didn’t do quite as well, but we wouldn’t expect them to given the shape of the yield curve (shorter duration bonds not doing as well as longer-duration bonds). But (wait for it…) everything’s relative! 10yr yields at 1.64% are only good news compared to the past 2 days. If you missed those 2 days, then today isn’t so much a “nice rally” as a confirmation that rates are at their highest levels since April. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Mortgage Rate WatchOver the past 30 days, interest rates have risen sharply . This is true for both mortgage rates and bond market benchmarks like 10yr Treasury yields. But another version of the 10yr Treasury yield continues to operate near all-time lows . How can rates simultaneously be rising quickly but still near all-time lows? Inflation! As we discussed last week, inflation erodes the value of bonds. As such, bond yields frequently move in response to changes in inflation expectations (higher inflation = higher rates). That correlation is easily seen in the following chart: Obviously, something changed in 2020. But what changed specifically for bonds and inflation? For starters, the Federal Reserve immediately began buying massive amounts of bonds shortly after the pandemic began. This acted to keep yields…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWireThe national delinquency rate has fallen below 4.0 percent for the first time since COVID-19 started messing up the world. Black Knight, in its “first look” at September’s mortgage performance data, says the rate in September, 3.91 percent, represents a reduction of more than 41 percent from September of 2020 and is 2.25 percent below the August level. Delinquencies have moved lower in 14 of the last 17 months. There were 2.068 million loans that were 30 or more days past due in September, not including loans in foreclosure. This is down 54,000 from the prior month and 1.474 million fewer past due loans than the prior September. Black Knight says there would have been fewer delinquencies in September if not for Hurricane Ida which hit Louisiana especially hard. There was an increase of 7,800…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Pipeline PressSemper Fi! Tomorrow marks the 38th anniversary of the 1983 bombing in Beirut of a U.S. Marine barracks in the largest conventional explosive blast in history killing 241 Americans. San Diego has a huge military presence, and while there I spent a few hours with the folks at PenFed discussing trends in jumbo lending and the overall market for the near future and for 2022. In the very near future, Halloween is only nine days away! Dating back 2,000 years to the Celtic festival of Samhain, Halloween has evolved into a celebration characterized by child-friendly activities like dressing in costumes, trick-or-treating and carving pumpkin. The U.S. Census Bureau estimates 73.1 million children under the age of 18 that are potential trick-or-treaters… and future home financers. Which of these…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryTo buy the dip or not to buy the dip (in bond prices). That is the question faced by traders today as 10yr yields hit the 1.70% technical level in after hours trading yesterday. This potential technical support coincides with the upper boundary of the ongoing trend channel. The day begins with a decent bounce from that level, but we should probably avoid getting too excited about it just yet. Bonds have bigger things to think about than modest technical bounces at long-term highs. While that sort of bounce can inform decent short-term momentum, the overall trend will continue to be dictated by big-ticket items like covid, inflation, Fed rate hike expectations, and curve trading (all of which are intertwined to a large extent). The case count narrative is well known: Inflation expectations haven’t…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.