Category Archives: Home builders

MBS RECAP: Bonds Hold Steady as Stocks Soar

Posted To: MBS Commentary

Stocks broke out in a big way today–a fact that may make the relatively ‘unchanged’ bond market performance more palatable. In bonds’ defense, they did nothing wrong. The CME open brought a bit of buying. The NYSE open brought a bit of selling, but the bias remained slightly positive overall with help from the confirmation hearing for new Fed Chair Powell. Powell didn’t put up with any–well… crap (no better word for it) from Senators seeking to use him for political posturing, but at the same time he didn’t rub their faces in the fact that they were being obnoxious . He’ll survive this job! Not only that, but he was more dovish than most expected him to be. That helped both stocks and bonds heading into mid-day. After that, bonds and stocks had less in common. Tax…(read more)

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Home Price Gains Continue Cooling Off

Posted To: MND NewsWire

Black Knight Financial Services reported on Monday that home prices as measured by its national Home Price Index (HPI) continued to slow on a monthly basis, although the year-over-year rate continues to accelerate. The company said the HPI rose 0.16 percent from August to September, only two-thirds of its increase (0.24 percent) from July to August. It was the sixth consecutive month the index’s growth had slowed. The HPI, which finished the month at $282,000, posted a 6.36 annual increase. The 12-month appreciation in August was 6.24 percent. The slowdown in gains was widespread . Half of the 20 largest states and 17 of its largest metros saw prices fall compared to the previous month. Michigan had the largest decline at 0.61 percent and Detroit led the large metro areas with a decline of…(read more)

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Mortgage Rate Volatility Will Increase From Here

Posted To: Mortgage Rate Watch

Mortgage rates were roughly unchanged today. That’s not too surprising considering lenders don’t tend to make big moves on the Friday after Thanksgiving, regardless of market conditions. Moreover, they’re working with a shorter-than-normal trading day. Bonds normally trade through 5pm Eastern time with 3pm being the deadline for many of the biggest players. When bonds close early, trading is only open through 2pm and the deadline for the biggest players is a moving target– especially on the day after Thanksgiving. When Federal/Bank holidays result in bonds having a day off, it’s not uncommon for an adjacent day to be one of these “early closes.” With most holidays, the market closure is contiguous (i.e. an early close day will precede a fully-closed day), thus making it clear to traders when…(read more)

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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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