Wednesday’s Fed rate cut was the worst kept secret in the financial world for months, and the 50bp rate cut was increasingly suspected in the week leading up to the announcement.  You’ve likely heard the old saying “buy the rumor, sell the news” when it comes to big ticket events in financial markets.  With bond yields being at the lowest levels in more than a year on the day before the Fed announcement, it’s very fair to view the strength as “buying the rumor” with the ensuing trading offering a fairly mild example of “selling the news.”  As 10yr yields rise back above last week’s range, it’s increasingly likely that this phenomenon is in its mature stages and the next impulse will be data driven.

As for the extreme correlation between Fed Funds Rate expectations and the bond yields most closely correlated with mortgage rate movement, here you go:

While still historically low, some of the changes in the first quarter appeared “troubling” and warranted extra scrutiny, according to Aces Quality Management.

Biden cast the Fed’s decision to lower rates as a vindication of his stewardship of the nation’s post-pandemic economic recovery and a sign of progress in the fight against high inflation that has been one of his — and Harris’ — biggest political liabilities.

The Federal Home Loans Bank System is under pressure to fund more affordable housing and has several proposals that may work in tandem with Vice President Kamala Harris’ goal of building three million new units in her first term.

As home prices rise, leading to larger transaction amounts, Certifid doubled the amount of wire fraud insurance coverage provided for transfers it vets.

Trended credit data that the industry’s increasingly required to use could help mortgage firms better forecast delinquencies and prepayments, a new study finds.

MBS Easily Outperform Longer-Term Treasuries

Few market watchers would have guessed that MBS would have held almost perfectly sideways since the start of trading on Wednesday this week.  Sure, there’s been just over an eighth of a point of movement in either direction, but prices are ending the day right in line with yesterday morning’s opening levels.  Today’s econ data presented some early headwinds, but they were overcome in short order.  MBS did especially well versus 10yr Treasuries due to the fact that MBS move more like shorter-term Treasuries these days (and shorter-term Treasuries were rallying). 

Econ Data / Events

Jobless Claims

219k vs 230k f’cast, 231k prev

Philly Fed Index

1.7 vs -1.0 f’cast -7.0 prev

Market Movement Recap

08:37 AM MBS are down a quick 2 ticks (.06) and 10yr yields are up 5.1bps at 3.754

12:47 PM Off the weakest levels and sideways.  MBS down only 1 tick (0.03) and 10yr up 4.3bps at 3.745

03:31 PM Slightly better over the past few hours.  MBS up 1 tick (.03).  10yr up 2.3bps at 3.725

OceanFirst’s own press release points out the federal government has obtained $120 million in relief in similar cases since 2021.

The Federal Reserve chair said he supports the revised proposal outlined by Vice Chair for Supervision Michael Barr and said the new proposal would get a vote by the full Board of Governors early next year.

Short-term rate cuts often don’t immediately translate to lower financing costs for 30-year home loans, and there are some unique circumstances this time.