Bonds Scratch Out Victory Despite Headwinds

MBS RECAP: Bonds Scratch Out Victory Despite Headwinds

Jan 16 2018, 5:00PM

Had it not been for a fairly abrupt sell-off in stocks (the first big day of losses in 2018, and the biggest open-to-close sell-off since late August for some major averages), there’s no guarantee that bonds would have ended the day stronger.  Even then, only some  of the yield curve was stronger–specifically 7yr notes and higher.

This is part of the “curve flattening” trade that dominated 2017 (2yr and 10yr yields getting closer together).  That trade grew volatile at the end of the year as well as last week, corresponding with our last 2 big sell-offs.  As the curve flattened over the past few business days, longer-term yields (which more closely follow mortgage rates) have been able to hold under key ceilings (like 2.60% in 10yr yields).

There are important floors too–like 2.52% in 10yr yields.  Bonds aren’t yet willing to challenge those, but that’s what would need to happen if the past few days are to be something other than a consolidation amid a broader move toward higher rates.  As far as today was concerned, there was a fairly clear bounce right at 2.52%.  On a positive note, however, we were nowhere close to testing the recent 2.60% ceiling.

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

FNMA 3.5
101-30 : +0-00
10 YR
2.5389 : -0.0131
Pricing as of 1/16/18 4:59PMEST

Today’s Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:28PM  :  Friendly Bounce For Bonds Thanks to Stocks
11:51AM  :  ALERT ISSUED: Under Some Pressure; Reprice Risk Slowly Growing
10:36AM  :  Still Modestly Stronger, But Bouncing at Important Floor

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Product Interest Rate APR
Conforming and Government Loans
30-Year Fixed Rate 4.000% 4.040%
30-Year Fixed-Rate FHA 5.000% 6.062%
30-Year Fixed-Rate VA 4.000% 4.295%
15-Year Fixed Rate 3.500% 3.570%
7/1 ARM 3.875% 4.056%
5/1 ARM 3.875% 4.085%
Jumbo Loans– Amounts that exceed conforming loan limits
30-Year Fixed-Rate Jumbo 4.125% 4.132%
15-Year Fixed-Rate Jumbo 3.875% 3.903%
7/1 ARM Jumbo 3.625% 3.895%
10/1 ARM Jumbo 3.750% 3.909%


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