MBS RECAP: Weaker Start, Stronger Finish on Omicron News

Posted To: MBS CommentaryWeaker Start, Stronger Finish Volatility has been elevated for the bond market in the past 4 weeks and especially in the past 2 weeks. Today was one of the milder days, but it was still good for a reasonably big shift from overnight levels to closing levels. During that time, yields fell from 1.50+ to 1.42. MBS continue to underperform but nonetheless made it back into positive territory. The most memorable market mover was the unsurprising revelation that the US has now logged its first case of Omicron, but the rally was in the works before those headlines hit. Econ Data / Events Fed MBS Buying 10am, 11:30am, 1pm ADP Employment 534k vs 525k f’cast, 570k prev ISM Manufacturing 61.1 vs 61.0 f’cast, 60.8 prev Prices Paid 82.4 vs 85.5 f’cast 85.7 prev Construction Spending 0.2 vs 0…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Mortgage Rates Rise Then Fall as Volatility Persists

Posted To: Mortgage Rate WatchMortgage rates were much lower at the start of business yesterday , but began rising in the afternoon as the bond market lost ground. That same momentum continued in the overnight trading session. By the time mortgage lenders were setting rates this morning, bonds had deteriorated enough for a noticeable bump toward higher rates. This was especially noticeable for lenders who didn’t change rates in the middle of the day yesterday. By the early afternoon, bonds were recovering as financial markets reacted to news of the first omicron case in the US. That sort of news fuels what’s known as a flight to safety in the market. This generally means weakness in stocks and strength in bonds. When bonds improve, rates fall , all other things being equal. The net effect was a return to Monday’s levels…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Residential Construction No Longer Dominating Spending

Posted To: MND NewsWireNational spending on construction spending rose slightly in October, but for the second month in a row, the increase wasn’t driven by the residential sector. The U.S. Census Bureau reported that construction put in place during the month was at a seasonally adjusted annual rate of $1.598 trillion, an 0.2 percent increase from September and up 8.6 percent compared to October 2020. On a non-adjusted basis, spending totaled $141.911 billion, down from $145.746 billion in September. For the year-to-date (YTD) spending totals $1.373 trillion, 7.5 percent more than the $1.231 spent to the same point in 2020. Privately funded construction f ell by 0.2 percent from the previous month to a seasonally adjusted rate of $1.245 trillion. This represents an 11.1 percent increase from the prior October. Residential…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Rates Rise, Refi Share Drops to Eight Month Low

Posted To: MND NewsWireThanksgiving week, a three-day business week for many, saw the usual sharp decline in mortgage activity although purchase applications remained seasonally strong. The Mortgage Bankers Association (MBA) says its Market Composite Index, a measure of mortgage application volume, fell 7.2 percent on a seasonally adjusted basis from one week earlier and was down 37 percent on an unadjusted basis. The Refinance Index decreased 15 percent during the week which ended November 26 and was 41 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 59.4 percent of total applications from 63.1 percent the previous week. It was the lowest share for refinancing since early April. The seasonally adjusted Purchase Index increased 5 percent week-over-week. The unadjusted…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

MBS Morning: Data, Fed, Issuance, And Variant Watching

Posted To: MBS CommentaryIt’s an interesting, confusing, and tumultuous moment for financial markets as traders digest an unprecedented confluence of relevant events. Two events account for a vast majority of this thesis: a potential shift in Fed policy at the next meeting and the unknowns surrounding the omicron variant. With those two gorillas in the room, we’re left to wonder what sort of impact we’ll see from the usual suspects such as econ data or bond issuance. On that note, today brings elevated corporate bond issuance and several economic reports. Bonds only seem modestly interested so far. In fact, the apparent reaction to the ISM data at 10am ET was delayed enough as to call ISM into question as the motivator. The volume spike suggests it was indeed relevant, but the yield movement suggests it…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.