MBS Weekly Market Commentary Week Ending 3/5/2021

Long-term 30-year yields have risen to 2.304%, the 10-year is currently yielding 1.57%, and the Fannie Mae 30-year current-coupon spread to the 5/10-year blend tightened to +70. On Friday, yields on Treasuries closed at their highest in a year.

According to data published by Freddie Mac, U.S. 30-year home mortgage rates rose to 3.02% from 2.97%. The average 15-year rate remained 2.34%, unchanged from week earlier. Refinance applications increased 0.1% for the week, according to the Mortgage Bankers Association. Refinance applications are 7% higher than this same week a year ago. The purchase index increased 2% from one week earlier.

Despite the 10-year selling off 15bps, the 30-year 1.5%, 2% and 2.5%, all ended the week outperforming their Treasury hedges. All are prime targets of Fed buying, with almost 70% of the bank’s $31.6 billion of mortgage purchases this week concentrated in just those coupons, according to data from the New York Fed.

Economic Calendar:

  • Tuesday: Class A notification
  • Wednesday: Refinance applications index and CPI data
  • Friday: PPI release, Class B notification