MBS Weekly Market Commentary Week Ending 3/19/2021

Long-term 30-year yields have risen to 2.405%, the 10-year is currently yielding 1.695%, and the Fannie Mae 30-year current-coupon spread to the 5/10-year blend widened to +80. Treasury yields continue to rise to their highest levels in over 12 months.

According to data published by Freddie Mac, U.S. 30-year home mortgage rates rose to 3.09% from 3.05%. The average 15-year rate increased to 2.40%, up from 2.38% a week earlier. Refinance applications decreased 4% for the week, according to the Mortgage Bankers Association. Refinance applications are 39% lower than this same week a year ago. The purchase index increased 2% from one week earlier.

Higher coupon MBS saw the best performance on Friday and the rest of the week. Lower coupon performance lagged a few ticks relative to Treasuries. The lag in performance for lower coupons highlights the duration and extension risk among coupons at the lower end of the stack.

Economic Calendar:

  • Monday: Existing Home Sales
  • Tuesday: New Home Sales
  • Thursday: Initial Jobless Claims