Analysis: Rising U.S. yields could spur mortgage-related selling of Treasuries – Reuters
Analysis: Rising U.S. yields could spur mortgage-related selling of Treasuries Reuters
Analysis: Rising U.S. yields could spur mortgage-related selling of Treasuries Reuters
Posted To: Pipeline Press
Here we are in the seemingly 58 th week of 2020. What’s new? The podcast of today’s commentary features thoughts from the Millennial host on how lenders can address that market, and it can be heard via Apple , Spotify , or Google : subscribe and download. In terms of news, the FHFA extended forbearance protection past March. (More below on that.) And rating agency Moody’s view is that the CFPB’s recent changes to the QM rules would “allow lenders to qualify more types of loans as QM, resulting in a non-QM market with loans of lower credit quality, since most of today’s higher-quality non-QM loans would qualify as QM under the new rules, making future non-QM more synonymous with non-prime… the rule, if implemented could incentivize some lenders to price riskier loans…(read more)
Posted To: MBS Commentary
After 8 straight days with yields closing higher than they opened, bonds are starting out in stronger territory with a chance to reverse the curse. The longer those losing streaks are, the more certain we can be of seeing a corrective green day. Today has every possibility of becoming that day. In fact, as of right now, it already is. But much like that old Jedi dude and the droids, this may not be the bounce we've been looking for. While a rally today would indeed fulfill the increasingly dire need for a technical correction in bonds, the rally would be more meaningful if it coincided with tomorrow's 10yr Treasury auction as opposed to today's 3yr. Why? 3yr Treasuries are a fundamentally different part of the bond market–one with far less bearing on mortgages, and simply not very…(read more)
Posted To: MBS Commentary
Friendly Bounce May Already Have Run Its Course Friendly bounces after strong selling sprees are slightly more likely to play out over 2-day time frames. That was the risk heading into today after Tuesday and Wednesday saw Treasury yields close lower for first back-to-back days since mid-January. And as far as Treasuries are concerned, the 2-day rule is in effect. Either that, or we seeing extremely cautious trading ahead of the 3-day weekend. Thankfully MBS outperformed, but most mortgage lenders priced defensively nonetheless. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Jobless Claims 793k vs 757k f'cast 812k prev Market Movement Recap 08:42 AM Very light trading overnight with Asian markets closed for lunar new year. Slightly weaker by the start of European hours and flat since…(read more)
Posted To: MBS Commentary
Locking vs Floating After Underwhelming "Rally Day." The recent losing streak in the bond market made it increasingly likely that we'd see a win this week. Ideally, it would have aligned with a strong response to Wednesday's 10yr auction, but instead, we got a halfhearted version on Tuesday. While this is technically a tactical cue to float for the most risk tolerant clients, that's an aggressive strategy until we see how the market reacts to the 10yr auction. Either way, the bigger picture rising rate trend remains easily intact. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Market Movement Recap 08:31 AM Bonds improved overnight as stocks remained in check and European bonds joined in the short-covering trade. A Spanish bond auction (of all the crazy things) was…(read more)
Posted To: MBS Commentary
Bad Vibes Persist For Bonds and Rates Bonds began the day in weaker shape, thus keeping the threat of an ongoing correction alive. After a fairly sideways morning, MBS dropped more sharply in the afternoon. Treasuries maintained a gentle, but clear selling trend throughout the day. Moreover, yields easily broke up and over the 1.125% pivot point without a second though. Taken together, this is bad news for rates as it easily reinforces the negative short term trend we've been following. In turn, that negative short-term trend is part of a broader negative trend in the bigger picture. Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm ADP Employment 174 vs 49 f'cast, -78 prev ISM Services PMI 58.7 vs 56.8, highest in 2 yrs ISM Employment Index highest since Feb 2020 Market Movement…(read more)
Posted To: MBS Commentary
Treasury Slide Transcends NFP; MBS Outperform Bond yields rose overnight–well before NFP came out–following the senate's passage of a budget resolution that clears the way for (eventual) passage of the $1.9 trillion stimulus package. NFP helped (then hurt, then helped again), but bonds ultimately gave in to rising rate pressures as traders began to build in a concession for next week's Treasury auction cycle. 10yr yields were up roughly 3bps on the day at the close, but MBS managed to hold roughly unchanged (further adding emphasis to the Treasury auction trepidation and budget related concerns as a bond market mover). Econ Data / Events Fed MBS Buying 10am, 1130am, 1pm Nonfarm Payrolls….. 49k vs 50k f'cast, -227k prev Unemployment %…. 6.3 vs 6.7 f'cast, 6.7 prev Avg work…(read more)
Mortgage rates spike to highest levels in nearly two months The Washington Post
Posted To: MBS Commentary
Stop me if you've heard this one before, but the bond market is in the midst of a big-picture correction from the all-time lows seen in the middle of 2020. The correction has taken the form of modestly-sloped 'trend channel' (parallel lines marking higher highs and higher lows in Treasury yields). A week ago today, yields bounced at the lower end of that trend channel, thus introducing the risk of a move back to the other side (the higher side!). Resilience on Friday and Monday offered hope that yields could find a lower ceiling before making such a move, but based on bond trading within the past 48 hours, the risks remain. Hope remains as well, due to the fact that yields are still technically trying to hold under the 1.125% level which has provided support on 9 of the past 17…(read more)
Like many non-Qualified Mortgage lenders, Deephaven Mortgage was forced to a halt earlier this year. The non-QM specialist is back.
The post Deephaven Mortgage re-enters non-QM market appeared first on HousingWire.