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 3/31/23

The market reaction went a little “too far, too fast” in regard to the Fed policy pivot. We witnessed the coupon stack (i.e., the price spread between TBA coupons) decompress in more than a trivial manner in a short period. However, the primary mortgage market has been largely reluctant to follow the Treasury rally, and mortgage rates have ultimately not dropped by the same amount as Treasury yields.

MBS Weekly Market Commentary Week Ending 3/24/23

The FOMC raised its benchmark rate by 25 basis points to a new range of 4.75%-5.00% on Wednesday, a middle ground policy move made in the hope of tampering inflation without further harming the banking system. The raise marks the 9th consecutive rate hike since the Fed began hiking in May of last year and brings the target fed funds rate range to the highest level since September 2007. While the central bank’s monetary policy has been aimed at correcting inflation, it has also revealed hidden weaknesses (e.g., entities whose balance sheets relied on low interest rates).

MBS Weekly Market Commentary Week Ending 3/17/23

Next week will reveal the Fed’s resolve on continuing to beat the drum on their aggressive inflation fight. The word until now has been that the central bank will keep hiking interest rates until inflation is under control.

MBS Weekly Market Commentary Week Ending 3/10/23

Events this week likely will lead to a higher peak interest rate than investors had been expecting just weeks ago. Central bankers appear worried about a cycle in which workers seek higher pay to offset inflation’s bite, and in turn trigger more price increases. In fact, inflation remains high because people have jobs and earn enough income to cover stubbornly expensive housing costs. Robust hiring is good for the economy and workers, but elevated pay growth puts added pressure on the Fed to bring down earnings. 

MBS Weekly Market Commentary Week Ending 2/10/23

The week after the jobs report is generally pretty data-light, and this week was no exception. With a dearth of data, market movement hinged on “Fed speak” and consumer sentiment. We saw some volatility return to bond markets as investors built in expectations for a more hawkish Fed. As a reminder, the Fed raised its benchmark rate last week to a range of 4.5% to 4.75%. Let’s run through what we’ve learned in the wake of that decision and a robust U.S. payrolls report that took some wind out of investors’ sails that had hopes for rate cuts by summer.

MBS Weekly Market Commentary Week Ending 2/3/23

As strong as economists may have thought the job market was, it’s even stronger. In addition to headline non-farm payrolls in January (517,000) beating estimates by around 300,000, employment numbers were revised higher for the past two months. Yes, a tight labor market is anathema to any sort of quick stop to the Federal Reserve’s rate hiking cycle, but the growth rate in average hourly earnings is declining, which will be welcome news to Fed Chair Powell and his colleagues. There exists a raging debate among economists over whether we’ll need a sharp rise in unemployment to keep inflation low.