Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Rate sheets this morning should be better than yesterday’s AM rate sheets, and similar to the many reprices better that we saw yesterday afternoon. Although mortgage bonds started out with some big losses this morning in overnight trading, by the time pricing comes out we should see most of the losses recovered. Bonds are volatile now, which was evident yesterday when we saw a huge swing. Thankfully this one was good for rates, helping turn what looked like was going to be an ugly day into a day where rates improved a little bit instead. There is a lot of talk now about how the recent sell off in bonds was excessive, which I pointed out last week but was making no difference at all. However, sentiment has shifted at least a little bit for now, so we can cautiously float a bit. I still think we will see rates take another jump, but I’ve certainly been wrong before.
They aren’t Taylor Swift, but they still got game…
Yesterday bonds were getting crushed to start the day, and rate sheets that came out had given back all of Friday’s gains and then some. However, around 10am Eastern, bonds started to rally… the 10yr Treasury yield was improving and mortgage bonds followed suit. The cause? The battle of the Bills.
Billionaire investor Bill Ackman wrote a tweet (an X?) that he had covered his short bets on Treasuries (meaning he was betting that yields would drop) and Bill Gross (of PIMCO fame) wrote that he’s buying short-dated interest-rate futures in anticipation of a recession by year-end. Around this time bonds started to rally, and kept rallying HARD – improving on the day from being down about -45bps to up on the day about +25bps on the day. That helped rate sheets recover quite nicely and saw rates improve aout .125%.
What now? Great question, and one that no one is really able to answer at the moment.
Loans closing in less than 15 days may consider starting the day cautiously floating, but be ready to lock. It’s really tough to float when we are seeing this much volatility – lock according to risk tolerance.
Loans closing in 15-30 days can cautiously float, but also have to decide when locking makes sense. With the Fed meeting next week, we could see a lot more volatility. Decision to lock or float here depends on how much risk the client is willing to take.
Loans closing in 30+ days should cautiously float. These loans have the most time to live through the ups and downs, but we really don’t know where rates will be in a couple of weeks.
Technicals:
The UMBS 65 coupon is at 99.06, -6bps on the day.
The 10yr Treasury yield at 4.87, well below the 5%.
