MBS MARKET COMMENTARY
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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.
Long-term 30-year yields have risen to 1.983%, the 10-year is currently yielding 1.182%, and the Fannie Mae 30-year current-coupon spread to the 5/10-year blend tightened to +65. The spread from the current coupon to Treasuries is the lowest in more than 19 months while yields on Treasuries closed at their highest in more than 10 months.
Last week’s Treasury selloff marked the quickest reversal in government debt yields since the collapse in March. The prospect of a unified Democratic representation in Federal offices fueled stimulus bets and contributed to a further steepening yield curve (See 5-30 Year Spread). Long-term 30-year yields have risen to 1.875%. The 10-year is currently yielding to 1.117%. The Fannie Mae 30-year current-coupon spread to the 5/10-year blend tightened to +67, the lowest in 18 months.
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.
The 10-year Treasury yield rose to 0 .98% to begin last week, following the announcement of Biden’s victory. However, uncertainty continues to plague markets due to the absence of a standard concession and continued accusations of fraudulent voting. The uncertainty caused the 10-year to retreat to 0.89% by Friday. The spread between the 10-year Treasury to the 5/10-year blend has tightened 3bps to +72.
The 10-year Treasury yield rose to 0.85%, 5bps higher than start of last week. The 30-year Treasury is currently yielding 1.63%. The Fannie Mae 30-year current-coupon spread to the 5/10-year blend tightened 1bp to +80. Volatility has risen to its highest levels in about six months.
Intermediate and long-term Treasury yields crept up 10-12bps last week. The 30-year Treasury is currently yielding 1.61% and the 10-year is 0.84%. The sell-off in Treasuries was induced by increasing expectations for a stimulus package either passed before the election (unlikely), or by a democratic win in the election based on recent polls.
The Fannie Mae 30-year current-coupon spread to the 5/10-year blend tightened 2 basis points to +79 as the U.S. Treasury 10-year yield rose 3 basis points to 0.86%. The spread between FNMA 30-year 2 and the 10-year Treasury is the lowest its been in 15 months.
The 10-year Treasury closed 2bps higher on Friday and is currently yielding 0.69%. The 30-year Treasury also increased 3bps to 1.48%. 10-year TIPS yield tightened 1bp to -0.94%.
MBA’s weekly mortgage applications index fell 4.8% in the week ended Sept. 25 after rising 6.8% in the prior week. Purchases were down 1.9% and refinances fell 6.5% after rising 3.4% and 8.8% respectively, in the previous week. The average 30-year fixed rate is 3.05% – the lowest in survey history, according to the MBA. Compared to last year, 30-year fixed rates are down 77bps. Freddie Mac’s 30-Yr FRM is currently 2.88%, down 2bps since last week. Also notable, pending home sales jumped 8.8% in August, following a 5.9% increase in July.
Treasury yields saw subtle gains through last week. The 30-year yield increase from 1.42% to 1.45%, and the 10-year edged up to 0.70%. The 10-year TIPS yield remains at -0.97%.
Treasury yields remain relatively unchanged despite minor fluctuations in both directions over the last two weeks. The Treasury yield curve steepened slightly with the 2-10 spread widening (by 4bps) to 0.54. The 10-year yield is currently 0.67%, and the 30-year is...