Ginnie Investor, HELOC, Broker, Correspondent, Climate Education Products; New Home Sales Numbers

“A herd of cows broke into a Colorado weed farm. Police and animal control are on the scene, and the steaks are high.” This will be the last day in the office for thousands of people heading to Denver this weekend for the MBA’s Annual Convention and Expo. Printers are churning out schedules, neckties are being picked up at the cleaners, and attendees are coming to the realization that the Denver convention space is 2.2 million square feet. Where’s the Segway concession booth? The conference goes until almost 10/31, and a new survey asked Americans what they were going to wear for Halloween. My 16-month-old granddaughter will be a piggy, but gone are the simple animal or a witch; 44 percent are going as a “fictional person or character” and 19 percent going as “an animal or creature,” fully 16 percent are going as “a concept.” Huh? And for treats being handed out, apples didn’t make the top 10: Reese’s Peanut Butter Cups, Peanut M&M’s, Regular M&M’s, Tootsie Pops… (Today’s podcast can be found here, and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products, nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics, unite the people, systems, and stages of the mortgage process. After Hear an interview between Robbie and myself on what to look forward to at next week’s MBA Annual.) Lender and Broker Software, Services, and Products

Mortgage Rates Effectively Unchanged Yet Again

Mortgage rates reached their highest level of the week on Wednesday and haven’t really moved since then.  Technically each subsequent day saw a microscopic reduction in the average top tier 30yr fixed rate, but the average borrower would likely be seeing the same quote all three days. This flat trajectory contrasts sharply with the first two days of the week.  At the time, Monday and Tuesday were cause for concern as there were no obvious catalysts for that level of movement.  These past 3 days suggest rates are content to wait for the next big motivation from current levels, hopefully. Why “hopefully?”  Because there’s never any way to ensure the future will behave as the present suggests when it comes to financial markets.  So what can we know?  There are a few things. We know that rates moved a lot higher over the past 4 weeks than the average media coverage suggests.  Mainstream weekly surveys only show a spike of about 0.40%.  The actual spike in daily average rates was over 0.70%.   We also know that next week’s jobs report (on Friday) is a huge source of potential volatility, for better or worse.  After that, the election and the Fed announcement can have a major impact the following week.  

Stronger Start, Weaker Finish

Stronger Start, Weaker Finish

Bonds had a fine morning with overnight gains bringing yields in line with the lowest levels of the past few days within the first 2 hours of domestic trading.  From the 9:30am NYSE open on, bonds began moving in the other direction.  There were no individual, new catalysts for the weakness, and more importantly, it wasn’t even a level of weakness that matters in the bigger picture.  Rather, this is the reality for the next few weeks in addition to being the occasional reality on any Friday afternoon after 3pm ET (due to the CME close).  Looking back on the week, the only move that mattered was the sell-off into Wednesday morning.  After that, the unwillingness on the part of 10yr yields to move back below 4.20 means they’ve been sideways ever since.  It’s unpleasant in the moment, but this is nothing compared to what we could see in the coming weeks.

Econ Data / Events

Durable Goods

-0.8 vs -1.0 f’cast, 0.0 prev

Market Movement Recap

08:32 AM Modestly stronger overnight and no major reaction to Durable Goods.  MBS up 2 ticks (.06) and 10yr down half a bp at 4.209.

10:41 AM giving up gains after NYSE Open.  MBS up only 1 tick (.03) and 10yr down .6bps at 4.207

12:33 PM 10yr up 0.4bps at 4.217.  MBS down 5 ticks (.16) from highs, but still near unchanged levels. 

02:30 PM New lows for MBS, down just under an eighth on the day and exactly a quarter point from the highs.  10yr up 1.3bps at 4.226

03:39 PM More new lows for MBS, now down 5 ticks (.16) on the day and 10 ticks (.31) from the highs.  10yr yields are up 2.8bps at 4.241

Another Flat Start After Uninspiring Data

Granted, we were by no means looking for big things from this morning’s Durable Goods data, but somehow it still managed to underwhelm.  That’s not saying much for Durable Goods considering the core category (which excludes defense spending and aircraft) rose much faster than expected.  If this was a report that mattered, bonds would have weakened in response.  As it stands, there was no reaction in terms of volume, and yields actually moved a bit lower in the next half hour.  The only other data this morning was Consumer Sentiment and it was met with a similar response.  With that, bonds are moving quickly toward the PM hours at effectively unchanged levels.