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Posted To: MBS CommentaryTurkish Lira bounced in the overnight session–not in any epic fashion, but enough to result in a bit of spillover for stocks/bonds. 10yr yields rose as high as 2.9022 before cooling back down. Notably, yields fell even as Lira maintained its token recovery. This simply reiterates yesterday’s point that US markets have their own agenda . Although they may periodically pay some attention to big swings in Turkey, they have already shown an ample willingness to trade against the grain of Lira volatility. With that in mind, the recent floor around 2.85% looks like the next major technical level for 10yr yields, whether we’re looking at US markets keeping a close eye on Turkey or not caring at all. In other words, this was a bounce that bonds had decided on yesterday, independent of further…(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 PressA Zen master visiting NYC approaches a hot dog vendor and says, “Make me one with everything.” The hot dog vendor fixes a hot dog and hands it to the Zen master, who pays with a $20 bill. The vendor puts the bill in the cash box and closes it. “Excuse me, but where’s my change?” asks the Zen master. The vendor responds, “Change must come from within.” Most believe that, despite thoughtful and continuous efforts by those in the industry, there won’t be any change coming from Congress this year, perhaps even next, on Freddie and Fannie’s status. There’s not a lot of urgency, nor is it an election issue, nor, it can be argued, are consumers being hurt by current policies and procedures. The FHFA and industry will be adjusting things as time goes on regarding guidelines…(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 CommentaryAnother day, another chance for market watchers and pundits of all types to make mountains out of Turkish molehills. Yes, the financial crisis in Turkey is important and it’s still a thing , but no… it’s not the most important market mover for bonds or stocks at the moment. There’s only a very small possibility that it’s even the biggest risk to the global financial market. Stocks and bonds agreed today, as neither covered any special new ground despite another big drop in the value of Turkish currency. There were also some unsubstantiated headlines that caused a bit of intraday volatility–but that was mostly limited to Turkish markets. 10yr Treasuries, for instance, were unchanged to slightly weaker . Same story for MBS. Had domestic markets been taking any compelling cues…(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 stayed steady at the lowest levels in more than 3 weeks as financial markets are still accounting for additional risks relating to Turkey. Simply put, Turkey is in the midst of a debt/currency/banking crisis and investors are worried about some sort of domino effect among banks that are heavily invested in Turkish banks. All this is worth a bit of “safe-haven” demand for US Treasuries, which offer essentially risk-free returns and a liquid place to park money temporarily. When investors buy more bonds–all other things being equal–it causes bond prices to rise . When bond prices rise, investors are technically willing to accept lower interest payments, and it’s that part of the equation that speaks to lower interest rates on US Treasuries and mortgage rates. Bottom line: drama…(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 CommentaryDid anyone else have to sit through the drug addiction video (or was it a book?) in grade school (or was it middle school?) where the main character kept returning to this amazing fantasy of driving an exotic sports car. Each time, he had to drive farther and faster to get the same enjoyment. You get the idea. Same story for bond markets when it comes to overseas economic/political/debt drama. We need more and more in order to fuel an ongoing rally. As of this morning, we just took a hit of the same drug that made us high on Friday, and… …nothing happened. Perhaps, if the Turkish drama spirals out of control in a bigger way, bonds will be more willing to entertain a break below that white dotted line. Until then, we’re left to wonder if this little diversion has run its course. There…(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 PressDon’t think that correct mortgage documentation is important? Think again, or ask Citigroup. The Federal Reserve said Friday it had fined Citigroup $8.6 million over poor quality mortgage documentation practices at its CitiFinancial subsidiary in 2015. The Fed Citi mishandled customer files as it was preparing to wind down its mortgage servicing business, doing so in 2017. But there is good news! The Fed said that the problem was corrected, and the Fed is terminating a separate 2011 enforcement action against Citigroup on a separate residential mortgage loan servicing matter, citing sustainable improvements by the bank. Dot those i’s and cross those t’s! Capital Markets The various high-ranking officials within the Federal Reserve know just as much about the direction of the…(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 CommentaryTired of hearing about Turkey yet? This is what happens when fairly quiet markets are interrupted by a thunderous roar from an unexpected place. Newscasters, analysts, and armchair economists you’ll talk to over the weekend are all happy to finally have SOMETHING to discuss other than Elon Musk, Apple being a trillion dollar company, or whether or not Keke loves them. Long story short, there’s nothing too meaningful going on in the world of interest rates this week, and the Turkey thing would be worth discussing even during busier times of year. As such, it’s going to feel like the only thing anyone is talking about for a while yet. Unfortunately, it’s pretty simple: it takes a LOT of drama out of Turkey to generate a merely moderate response in US bond markets. Moreover, when…(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 , and indeed most interest rates, are tied to movement in the bond market. In turn, bonds tend to benefit when big, scary stuff is shaking global economic confidence. In today’s case, the debt crisis in Turkey did just that. Investors sought safe haven in bonds, and rates moved to the lowest levels since July 20th. Lest you think that Turkey is a constant arrow in the quiver of potential market movers for rates, understand that things have had to get pretty bad for US markets to unequivocally respond. This has been a festering for several days (even months, depending upon how nervous or clairvoyant you might be by nature). Today was really the first day that where there’s no doubt that Turkey is in the drivers’ seat for global financial markets. See how weird that sounded? You…(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 NewsWireAn aging housing stock is usually thought of as a problem. Older homes can be more expensive to maintain and easily fall into enough disrepair to be a health or safety hazard or completely uninhabitable. Construction since the housing crisis has not kept pace with the homes that age out or are otherwise removed from the housing stock and this means that the overall age of the U.S. housing stock is gradually aging. Na Zhao, writing in the National Association of Home Builders’ (NAHB’s) Eye on Housing blog says data from the 2016 American Community Survey (ACS) puts the median age of owner-occupied homes at 37 years compared to a median age of 31 years in 2005. The aging trend, as the figure below shows, accelerated during the Great Recession. Na Zhao, while not denying that the increasing age…(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 CommentaryTurkey (the country, not the lunch meat) is the 17th biggest economy in the world in terms of GDP. That’s roughly 20% bigger than the next closest country, Saudi Arabia, and 4 times bigger than Greece. All that to say, Turkey isn’t a completely insignificant piece of the global economy. So the fact that they’re having a rather epic debt crisis is making the news. I discussed this a bit yesterday, and at the time, we weren’t seeing enough correlation spill over from the plummeting Lira to US markets. Not only that, but by far and away, yesterday’s biggest domestic market movements were completely independent. Bonds big move lower in yield followed the Producer Price Index. At that time, Lira were doing nothing. And it was the same story with the quick stock sell-off at 3…(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.