Category Archives: Home builders

MBS RECAP: Bond Rally More Coincidence Than Causality

Posted To: MBS Commentary

We’ve discussed the tenor of Thanksgiving week in bond markets being more to do with serendipity than traditional “cause and effect” relationships. That means the events and data on the calendar that typically push and pull on bonds throughout the course of the day are less relevant than normal. Instead, it’s the sometimes random, sometimes counter-intuitive tradeflows preceding a 4-day weekend that set the tone. And sometimes the seemingly random trades DO happen to line up in an intuitive way with the economic data and events. Today was one of those days. Both Durable Goods and Consumer Sentiment provided ways to justify bond buying. The only catch is that the bulk of bond buying didn’t happen in direct response to either data release. Still, we can at least say the…(read more)

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MBS RECAP: Market Watchers Lulled to Sleep Ahead of Week's Biggest Day

Posted To: MBS Commentary

So far this week, both of the trading days have done everything in their powe r to be as meaningless as possible. There have been no major attempts to break floors or ceilings in rates, no major correlation between market movement and data/events, and not much by way of data and events in the first place! Of particular note: the intraday high 10yr yield in the past 4 trading sessions has occurred somewhere in the 2.37’s. That gives us a great preliminary ceiling to watch as we stand guard against the risk of volatility tomorrow. It will be higher due to the holiday calendar (last day before Thanksgiving weekend) and the presence of the week’s only big ticket economic and monetary events (Durable Goods in the morning and Fed Minutes in the afternoon). Bonds improved slightly on the day…(read more)

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MBS RECAP: Moderate Weakness Keeps Bonds Rangebound

Posted To: MBS Commentary

Looked at under a microscope, there was a fair amount of intraday volatility this morning. Treasury yields fell overnight, reaching the best levels in 3 sessions, but then abruptly sold-off soon after domestic trading began. The bulk of the selling was close enough to the CME open that we could chalk the move up to a few big trades at the start of the day/week. We could also consider the roll-out of a corporate bond deal just before the selling. Finally , stocks were fairly well-correlated with bond yields today, and stocks had been rising steadily as bond yields moved higher at the beginning of European trading hours. Or we could just throw all of that out the window and focus on the fact that bond markets did what they needed to do in order to remain in the center of their broader, consolidative…(read more)

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Q3 was "Rough Patch" for Housing; Q4 Indicators Not Positive

Posted To: MND NewsWire

Housing activity in the third quarter of 2017 is described as “continuing its rough patch” in Fannie Mae’s latest edition of Economic Developments . The company’s economists say that activity pulled back across the board during the quarter. It was also the third in a row in which housing starts fell, although Friday’s report on October residential construction signals a possible resurgence. New home sales were also down, despite an impressive 18.9 percent gain in September, a month in which existing home sales also rose for the first time in four months. The increase was not enough to bring the quarter into positive territory. The economists note that, while “the hurricanes disrupted activity in the South, housing weakness was present before the hurricanes and largely stems from the supply…(read more)

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MBS RECAP: Bonds Adrift, No Land in Sight

Posted To: MBS Commentary

Bond markets are officially looking for inspiration, motivation, or even just something to pass the time. Today’s events didn’t seem to do the trick as trading levels drifted aimlessly throughout domestic hours. That’s not to say bonds didn’t move, however. The overnight session saw 10yr yields rise to the 2.36% pivot point to start the day. From there, they never came close to breaking outside a narrow 2bp range until after the 3pm CME close. This means all of the morning’s economic data and the passage of the House tax bill (just the House, not the Senate) were effectively meaningless as far as bond markets were concerned. When we see surges in volatility at (and after) 3pm ET, it’s a sign that trading conditions are light and that day traders had been making bets…(read more)

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MBS RECAP: Bonds Defy CPI and Retail Sales to With Solid Gains

Posted To: MBS Commentary

As noted in today’s MBS Huddle, an absence of any selling pressure in bond markets was a positive result in itself. Selling pressure would have been fairly easy to justify given the slightly stronger CPI data as well as moderately stronger Retail Sales. Bonds not only held their ground but did so at the lowest yields of the week. Things began to look a little shaky heading into the afternoon, but as soon as European markets closed, bond buyers found themselves in control again. Treasuries began drifting back toward lower yields (more so in longer-dated bonds) and MBS approached the morning highs, up more than an eighth of a point. The yield curve (which typically refers to the spread between 2 and 10yr Treasury yields) has certainly been a consideration for traders. The fact that it broke…(read more)

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MBS RECAP: More Consolidation, But This Time at Least It's Green

Posted To: MBS Commentary

The past two sessions have been fairly nondescript in the bigger picture. Both have traversed almost exactly the same trading range. Both have exhibited very little direct attachment to news or events. And neither have offered up a meaningful attempt to break out of recently established ranges. Incidentally, the same patterns are playing out in multiple markets beyond the bond market. At least for bonds, today’s spinning wheel of indecisiveness stopped on luckier numbers. In other words, the trading range was the same as yesterday, but we closed near the best levels of that range. I’d view this as a factor of random timing before I’d jump to the conclusion that bonds are about to rally. While the latter is certainly possible, there’s a lot riding on tomorrow’s CPI data as…(read more)

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MBS RECAP: Stronger Start, Weaker Finish, Still Waiting For Game to Start

Posted To: MBS Commentary

For the first time since 2006, market participants didn’t get a weekday off for Veterans Day. For all intents and purposes, traders ended up taking today off anyway–at least when it comes to bond market volumes and outright changes. 10yr yields were nearly unchanged , rising half a basis point to end at 2.407. Fannie 3.5 MBS were 1/32nd higher on the day at 102-15. If we leave it at the closing levels compared to Friday, nothing happened today, but for those who happened to follow along with the intraday market movement, it was a bit bumpier. Treasuries began the session with some decent gains . 10yr yields were as low as 2.37 just before the domestic hours began. Weakness picked up at the CME open and NYSE open (lower volume days often see opening bells for various exchanges cause movement…(read more)

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MBS RECAP: Evidence in Bond Beating Case Circumstantial at Best

Posted To: MBS Commentary

Bond markets took a beating today and analysts are still trying to build a case against a slew of potential assailants. Here’s what we know. European bonds attempted to lead US bonds into weaker territory yesterday, but US bonds managed to avoid losing too much ground. In hindsight, US rates likely would have risen more had it not been for the Senate tax bill or the strong 30yr bond auction. On a tangential note, the strong auctions (both for 30yr bonds and 10yr Treasuries in the previous day) distorted the yield curve (the spread between 2 and 10yr yields). That’s where the real bounce was taking place. Strong auctions drew attention away from the bounce in the yield curve which had just hit new post-Financial-Crisis records just before the European bond sell-off. Friday saw the curtain…(read more)

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Would "Student Loan Mortgages" Solve Homeownership Problems?

Posted To: MND NewsWire

In June the National Association of Realtors® (NAR) released a “working paper” from the Rosen Consulting Group and the Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, detailing several barriers to homeownership ; affordability, post-foreclosure stress disorder, access to mortgages, and student loan debt, among others. A second Rosen Group paper was released last week with suggestions for overcoming these barriers. We made passing reference to it while summarizing NAR’s housing forecast for 2018. However, but some of the suggestions contained in Improving Access to Affordable, Safe and Sustainable Homeownership , especially those relating directly to affordability and mortgage access, are worth a closer look. One key factor, relating to both affordability…(read more)

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