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Posted To: MBS CommentaryBonds began the day in weaker territory this morning, and they didn’t need anyone to twist their arm in getting there. That was our first clue that traders are simply positioned extra defensively ahead of tomorrow’s FOMC events (announcement, forecasts, and press conference). Subsequent clues arrived throughout the day as follows: 1. Consumer Confidence was exceptionally strong, yet produced no visible reaction in bonds. This suggests traders had priced in their pre-Fed defensive positioning and weren’t keen to move far from there. 2. Similar story with the 5yr Treasury auction. It was weaker than expected, which argues for bond market weakness, yet we’re ending the day right in line with morning levels. As always, keep in mind that tomorrow’s volatility isn’t necessarily…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Mortgage Rate WatchMortgage rates were unchanged for some lenders today while others were in slightly higher territory. Either way, that leaves the average lender at the highest levels in more than 7 years. For what it’s worth, there are a few lenders that were slightly worse off for a day or two earlier this year. In terms of outright levels, the average top-tier scenario is being quoted 4.875% today. Why so high? Part of the problem is ongoing . A strong economy is not good for rates and neither is additional government borrowing–both big issues in 2018. Those big issues go hand-in-hand with a Federal Reserve that is more willing to hike its policy rate and shrink its balance sheet. We’ll get a fresh update on the Fed’s outlook tomorrow, and indeed, that could be part of the reason that rates are staging at…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWireBoth of the major home price indexes that were released this morning showed continued deceleration in the rate of appreciation, even though July is usually one of the strongest months of the year for home price gains. The Federal Housing Finance Agency’s (FHFA’s) House Price Index (HPI) and most variations of the three of the S&P CoreLogic Case Shiller Indices turned in slightly smaller increases in July than in June, both month-over-month and on an annual basis. The Case-Shiller National Index which covers all nine U.S. Census districts, reported prices were up 6.0 percent compared to July 2017. Last month’s June to June comparison put the gain at 6.2 percent. The monthly figures also softened. Before seasonal adjustment, the Index posted a gain of 0.4 percent. and 0.2 percent after adjustment…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryWe talk sometimes about bonds taking a “lead-off” (like in that sport that a few of us still remember). Well, at least I talk about bonds taking a lead-off. In baseball, it’s pretty much a given any time a runner is on base. The only question is whether the runner maintains a constant, safe distance from the base as opposed to pushing closer and closer to the next base just before the next pitch is delivered. That next pitch will cross the plate tomorrow afternoon following the Fed Announcement, or so we’d expect based on the absence of other big-ticket market movers as well as the behavior of the proverbial base-runner. To be clear, bonds have been holding a steady distance away from base (let’s call it 3.0% in 10yr yields). Over the past 5 days, this lead-off range has…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Pipeline PressThe U.S. economy and job market are firing on nearly all cylinders (hence higher rates) but the housing market has essentially stalled. Here’s a stat that most real estate agents and lenders will agree with: Home purchases by international buyers are down 21% in a year . The MBA (Mortgage Bankers Association, not to be confused with an advanced business degree) echoes this in its latest forecast. Its economics team believes refi declines will wipe out purchase gains , and that overall mortgage originations are expected to decline between 2018 and 2019. Purchase volume is expected to fall from $332 billion in the third quarter to $270 billion three months later, and refi production is projected to fall from $111 billion to $100 billion in the fourth quarter. During all 12 months of this…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryHave you heard? The Fed announcement is coming up on Wednesday. While you’ve undoubtedly heard about that more than a few times (unless this is your first day here, in which case, welcome!), it continues to bear repeating, largely because bonds aren’t doing anything to suggest they care about anything else. In fact , we can’t even be sure they will care about what happens on Wednesday, but that’s certainly the best guess at this point. All of the above ALMOST had a caveat today as there was some early volatility surrounding comments from European Central Bank President Mario Draghi. In short, Draghi was hawkish. He talked about inflation increasing “vigorously,” but this was ultimately a bigger deal for European bond markets than for US Treasuries and MBS. Bonds ended…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Mortgage Rate WatchMortgage rates are having a bleak September, having risen at least an eighth of a percentage point in all cases and by a quarter of a point in many cases. Depending on the lender and scenario, conventional 30yr fixed rates of 5.0% aren’t out of the question although 4.875% remains far more prevalent for borrowers with lots of equity/down-payment and top-tier credit. Either way, that’s as high as mortgage rates have been since 2011 for most lenders. Most of the recent damage had been done by Wednesday afternoon of last week. Since then, underlying bond markets haven’t been moving as much, relatively. This could have everything to do with Wednesday’s Fed Announcement where the Federal Reserve will undoubtedly hike its policy rate and release updated economic forecasts. Incidentally, today’s rates…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWireFreddie Mac’s Economic and Housing Research Group said on Monday that the U.S. economy and job market are firing on nearly all cylinders , “but the housing market has essentially stalled .” The solid growth of the U.S. economy during the second quarter, an increase of 4.2 percent and exceeding forecasts of 4.1 percent, was the fastest in nearly four years. Solid consumer spending and business investment, the Group says in its September Forecast, should keep the economy on a very strong growth path of 3.0 percent this year, moderating to 2.4 percent next year. However, weaker affordability, homebuilder constraints, and ongoing supply and demand imbalances over the summer resulted in fewer home sales and less home construction compared to earlier in the year. Those sales declined in the second…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: MBS CommentaryIt would be a tad dramatic to say that rates are at a crossroads as we head into the end of September, unless there’s any additional weakness this week. That’s because any additional weakness will bring yields closer to breaking 2018’s previous high of 3.128% set on May 18th, 2018. When rates break a long-term high, there’s always a risk that the previous ceiling will act as technical line in the sand. The natural fear would be for such a breakout to prompt additional momentum toward even higher rates . That’s always a possibility, but it’s one of two. The other possibility–in the event of additional weakness this week, of course–is that yields would simply be stretching the boundaries of existing ranges or perhaps just extending an upwardly-sloped trend. In he case…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.

Posted To: Pipeline PressWe’re now officially in autumn, one week left in the 3rd quarter. Most states in the U.S. don’t change their clocks until November 4th, but in Europe they are doing in 2019 what many in this country wish the government would do: We’re now officially in autumn, one week left in the 3 rd quarter. Most states in the U.S. don’t change their clocks until November 4 th , but in Europe they are doing in 2019 what many in this country wish the government would do: end changing clocks at all . Why can’t the U.S. be so sensible? Speaking of “sensible,” do the summer interns of Goldman Sachs represent that entire age group, or are they different? (“Everyone’s above average on our team!”) Here’s an easy to read survey showing their values…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.