MBS Weekly Market Commentary Week Ending 2/19/2021

Long-term 30-year yields have risen to 2.169%, the 10-year is currently yielding 1.375%, and the Fannie Mae 30-year current-coupon spread to the 5/10-year blend widened to +77. Yields on Treasuries closed at their highest in almost a year.

According to data published by Freddie Mac, U.S. 30-year home mortgage rates fell to 2.81% from 2.73%. The average 15-year rate fell to 2.21%, up from 2.19% a week earlier. Refinance applications decreased 4.7% for the week, according to the Mortgage Bankers Association, following the previous week’s 4.2% drop. The purchase index decreased 6.1%. VA refinancing applications fell 4.1% after rising 8.7%.

The U.S. Treasury will auction $209 billion more of debt this week, adding to the upward pressure on Treasury yields. Federal Reserve support for mortgages will be on the heavier side this week, with about $6.9 billion targeted per day. This outweighs the 30-day average for the Fed’s MBS buying at $6.3 billion per day.

Higher-coupon UMBS 30-year MBS were best performers on Friday, with the 4% best in show at +2.75 ticks versus its Treasury hedges. The 1.5% through 2.5% coupons – the coupons with the highest durations and therefore most vulnerable in a rate sell-off, lagged.

Economic Calendar:

  • Tuesday: CoreLogic Home Price Index
  • Wednesday: New Home Sales, MBA Refi Applications Index

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

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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.