MBS Weekly Market Commentary Week Ending 11/27/2020

Intermediate Treasury yields fell 2bps to 0.83% to finish out the week. The 30-year Treasury is currently yielding 1.56%, relatively unchanged from the start of the week. The Fannie Mae 30-year current coupon spread to the 5/10 year blended widened 1bp to +76.

According to data published by Freddie Mac, U.S. 30-year home mortgage rates remained steady at 2.72 percent. 15-year rates remained steady at 2.28 percent. Mortgage applications increased 3.9 percent as of Nov. 20 from the previous week. Existing home sales were up 4.3 percent as of Oct. 31 from September. Data published by the Mortgage Bankers Association shows refinance activity increased 4.5% for the week ended Nov. 20, following the previous week’s 1.8% decline. The refi index stands 78.7% higher this year compared to last year. The purchase index increased 3.5% after also increasing 3.5% last week.

Cumulative 5-day performance of MBS coupons, relative to Treasuries, was mixed last week. Fannie 30-years outperformed the Treasury by 1-4 ticks on lower coupons. The 3.5 coupon continued its rocky performance, by lagging 3 ticks behind. Ginnies outperformed the 10-year benchmark by and large. The 2s were the strongest in the security, outpacing the benchmark by 8 ticks. Fannie 15-years were a bit more mixed with the lowest and highest coupons finishing the week roughly flat. 15-year 2.5s and 3s lagged the 5-Treasury by 4 ticks.

On Wednesday, Fed minutes were released detailing the FOMC discussions from the November 4-5 meeting. In their talks, Federal Reserve officials discussed providing more guidance on their bond buying strategy. “Many participants judged that the Committee might want to enhance its guidance for asset purchases fairly soon,” according to meeting minutes. The Fed is currently buying U.S. Treasury and mortgage-backed securities at a combined pace of about $120 billion per month, with purchases spread out evenly across maturities Key events this week:

  • Monday: Pending Home Sales
  • Wednesday: MBA Mortgage Applications
  • Friday: Payrolls

10-Year Treasury Yield Curve

Compare this chart with the mortgage rates chart to see how the 10-year treasury and mortgage rates are correlated. Read more below to learn how mortgage rates are tied to the 10 year treasury yield. View raw data on U.S. Department of the Treasury website.

 

Mortgage Rates Today

The current MBS daily rates are shown below in this chart for 5/1 Yr ARM, Jumbo 30 Yr, FHA 30 Yr, 15 Yr Fixed, 30 Yr Fixed. Sign up for our MBS Market Commentary to receive daily mortgage news in your inbox.

About the Author

Robbie Chrisman, Head of Content, MCT

Robbie started his mortgage industry career with internships during high school and college at Peoples National Bank in Colorado, and RPM & Bay Equity in the San Francisco Bay Area. After graduating from The University of Texas at Austin with a degree in Finance in 2014, he went to work at SoFi, where he rose to Director, Capital Markets assisting in the creation of SoFi’s residential mortgage division before leaving to work for TMS in Austin, Texas. From there, he went to work for FinTech startup Riivos in San Francisco and now is the Head of Content at Mortgage Capital Trading (MCT) in San Diego.

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Previous Weekly Market Reviews by Mortgage Capital Trading (MCT)

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MBS Weekly Market Commentary Week Ending 1/27/23

Even with the most aggressive pace of rate hikes in over a generation during the past year, recent data suggests that there’s still a path to a “soft landing” for the Federal Reserve. The U.S. economy posted the kind of mild slowdown in the last quarter of 2022 that the Fed wants to see as it attempts to tame inflation without choking off growth. Gross domestic product beat expectations to rise at a 2.9% annualized pace, down from 3.2% in the third quarter and a long way from a recession.

MBS Weekly Market Commentary Week Ending 1/20/23

Have you heard? Inflation was so 2022. All jokes aside, after we learned last week that U.S. inflation cooled for the sixth consecutive month (the consumer price index dropped 0.1% in December compared to the month prior), expectations are now that the Federal Reserve is likely to downshift rate hikes to 25 BPS going forward, beginning at next month’s FOMC meeting.

MBS Weekly Market Commentary Week Ending 1/13/23

Pay attention to the bond market rather than the Fed. That’s what I’m hearing as we learned this week that inflation continued to ease in December, though much focus was also on Wells’ exit from the correspondent space and its ramifications. The headline CPI (-0.1% month-over-month, +6.5% year-over-year) posted the slowest inflation rate in more than a year and core inflation (+5.7% year-over-year), which excludes food and energy, also posted the smallest advance in a year.

MBS Weekly Market Commentary Week Ending 1/6/23

While it’s back to business as usual, it was a fairly quiet week as we settled into the new year. Fast inflation and high interest rates dominated the narrative and upended markets across the world last year. When the dust settled, 10-year Treasuries were 200+ BPS higher than the start of the year, the curve inverted in a bearish fashion faster and farther than ever, implied volume spiked, and mortgage spreads were pushed from stubbornly rich to suddenly cheap. The result was an entire trade-able universe moving out of the money, originations grinding to a halt, and duration becoming a function of illiquid trade flows.

MBS Weekly Market Commentary Week Ending 12/23/22

MCT would like to wish everyone a Merry Christmas and Happy Holidays. Talk to close the year has been dominated by the Federal Reserve’s most aggressive policy tightening in four decades and its impact on the economy, and for us the residential housing market.