It’s been a remarkably calm week for mortgage rates, and a fairly decent one relative to several recent examples.  The average top tier 30yr fixed rate hovered just over 7% for most of November before breaking back into the high 6% range at the beginning of last week.  Since then, there haven’t been any “bad days” for the mortgage market, even if we’re still a long way from the low rates of September. If rates can’t be as low as we might like them to be, the next best thing is for them to be stable and they’ve done exceedingly well on that front.  Since last Friday, the average top tier 30yr fixed rate hasn’t moved more than 0.02% on any given day.  Today was the least volatile as there was no change versus yesterday’s latest levels. This little “ledge” in the high 6% range corresponds to a similar ledge in 10yr Treasury yields at 4.17%.  Both are arguably bracing for impact from tomorrow’s big jobs report.  Said “impact” could either help or hurt, depending on the outcome of the data.  In general, the lower the job count, the better it would be for rates, and vice versa.

Calm Week So Far, But All Bets Are Off After Jobs Report

Bonds were slightly weaker overnight and did just a bit more selling after the Jobless Claims data, but the losses were erased by the early afternoon.  Even then, they were never that big in the first place.  The muted volatility fit nicely in a week where the tone has been decidedly calm and the range has been reliably narrow. It’s also a perfect set up for the report that always reserves the right to rock the boat (Friday morning’s jobs report).  Expectations are for a fairly middle-of-the-road 200k print for nonfarm payrolls and a slight uptick in the unemployment rate.  

Econ Data / Events

Jobless Claims 

224k vs 215k f’cast, 213k prev

Continued Claims

1871k vs 1910k f’cast, 1896k prev

Market Movement Recap

08:46 AM Modestly weaker overnight and slight additional losses after solid jobless claims data.  MBS down 5 ticks (.16) and 10yr up 2.6bps at 4.214.

02:13 PM Bouncing back a bit into the PM hours.  MBS down only 1 tick (.03) and 10yr down half a bp at 4.183

03:29 PM Best levels of the day with MBS now unchanged and 10yr down 1.5bps at 4.173

Jobless Claims 

224k vs 215k f’cast, 213k prev

Continued Claims

1871k vs 1910k f’cast, 1896k prev

At first glance, the 224k figure in jobless claims may seem like a moderately positive thing for bonds, but our ongoing chart of non-seasonally adjusted data shows that it’s a bit misleading.  This was actually the lowest claims reading on a non-adjusted basis than any of the other years in our comparison.

In other words, zero signs of labor market weakness in this particular data and thus no surprise to see bonds moving back up a bit.

The development marks another step in eNote adoption at government housing agencies following an announcement allowing commingled Ginnie Mae securitized pools earlier this year.

The Federal Reserve chair is not concerned about President-elect Trump nominating his successor well in advance of the end of his term in 2026, saying he is “confident” he will have a productive relationship with the next Treasury Secretary.

Paul Atkins, a noted critic of the Consumer Financial Protection Bureau, will join the Financial Stability Oversight Council, where he will play a role in shaping housing policy.

Mortgage trade groups have vowed to reintroduce the trigger leads bill next year.

Rep. French Hill, R-Ark. — one of the leading contenders to chair the House Financial Services Committee next year — focused on ‘debanking’ of crypto and other companies in his questions to the witnesses.

Bonds drifted steadily higher in yield during the overnight session with most of the weakness seen after European markets opened. The net effect was roughly 4bp increase in 10yr yields and an eighth of a point of weakness in MBS.  ADP data did no harm at 8:15am, but bonds stayed near opening levels during the first 2 hours.  Today’s marquis data–ISM Services–came out much weaker than expected.  That was all it took to spark a reversal that leaves 10yr yields almost 3bps lower heading into the PM hours.  The eighth point loss in MBS has turned into an eighth point gain.