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  • 10yr yields hit the highest levels in more than 4 years this afternoon as bigger-picture selling pressure looks to be taking the reigns back from the Springtime consolidation that helped rates hold steady-to-slightly lower in March.  There are no big, obvious reasons for the sudden spike in rates. We're left to cobble together a narrative from boring, esoteric stuff like an "imbalance in trad...

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  • Rates are in the midst of a serious, threatening move higher.  Yesterday brought additional confirmation of the end of the friendly Springtime consolidation trend and it took us one step closer to the highest yields in more than 4 years.  The specific reasons for yesterday's weakness were covered in the MBS Live Huddle, but even then, the bigger-picture justification for gradual weakness in 2...

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  • The break outside what we'll call the "Springtime Consolidation" for bonds started taking shape as early as last week.  On Thursday and Friday, yields hugged the upper boundaries of that trend, simultaneously shying away from the sort of positive bounce that would typically suggest the trend's continuation.  No matter!  Perhaps they just needed to think things over for the weekend  and things...

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  • We've been increasingly wary about a potential break of the recent consolidation/rally trend--the one that saw yields move sideways to slightly stronger from late Feb through early April.  Yields tiptoed to the top of that range as of Tuesday and then fired a more forceful warning shot with a bigger breakout yesterday.  Today looks set to continue the destruction of the trend with sharp losse...

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  • Today was a more serious version of the same sort of warning shots seen at the end of last week.  At that time, bond yields rose to challenge an intermediate ceiling at 2.835%, but didn't go out of their way to break it.  This week began with higher yields on Monday morning, but a nice recovery throughout the day.  When yesterday's gains added to that recovery, it was tempting to hit the snoo...

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  • The term "earnings season" gets thrown around quite a bit in financial news, but what is it, exactly?  Simply put, it's a period of several weeks each quarter where a majority of companies release their earnings reports.  This is always of interest to the stock market as it's something of a report card for parents wondering how their children are doing in school.  The first quarter of 2018 is...

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  • Much of the analysis of the past few days has focused on the downwardly sloped trend channel seen in today's first chart.  This can be thought of as the "correction trend" that helped bonds settle down after a glut of selling pressure to kick off the new year.  From a technical standpoint, that trend has been under attack for the past 3 days.  In the strictest sense, it's actually been broken...

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  • With elevated stock/bond correlation of late, it's always worth noting when things move in the opposite direction.  Today was such a day, with stocks making solid gains while bonds managed to hold their ground near unchanged levels.  Corporate bond issuance and stronger economic data also added to ostensible challenges for rates, thus making the ground-holding all the more interesting.   But ...

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  • Bonds were quite a bit weaker in the overnight session.  According to the average media report, this was in response to Syria-related developments.  The "logic" was that because the US had launched missiles into Syria WITHOUT sparking military escalation with Russia, that the whole Syria situation would just calm down from here.  Again, you're being asked to believe that the announcement of a...

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Mortgage News Daily
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  • Another week, another change to savor the scent of red herring in the air.  Have you ever smelled a herring--let alone a red one?  They're oily little bait-fish (like a bigger anchovy) and once out of the ocean (or the bait freezer at your local tackle shop), they don't smell great, whether dyed red or not. Something else that smells fishy are the news media's versions of the fabled herring. ...

Mortgage News Daily
Mortgage News Daily
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  • Bonds were technically stronger today.  There is green on the screen right now for everything but 2yr Treasuries.  It's not huge, but at least it's in the right direction.  10's ended the day down nearly 2bps and Fannie 3.5 MBS were up an eighth of a point. There is, however, a catch.  It quickly becomes apparent if you happen to look at a 5-day chart of MBS and Treasuries as opposed to a 2-d...

Mortgage News Daily
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  • I started using some more serious words to talk about bond market weakness yesterday, but I'll make them simple and keep the assessment short this morning.  In a nutshell, we've gone from tracking a linear, well-behaved, modestly-positive correction since February 22nd to wondering if that correction just ended.   We're merely "wondering" because we haven't seen enough weakness to confirm it ...

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  • At first glance, today was all about a de-escalation of yesterday's Syria rhetoric from Trump (re: "missiles").  Given that we were able to credit yesterday's news for helping bonds improve, it isn't too much to ask to believe today's news could push the other direction.  But this didn't end up being the day's only market mover for bonds, and possibly not even the biggest.  And while I'll sto...

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  • On a week where the calendar of events had every right to push bond yields more decisively away from their most important recent technical level (2.795% in 10yr yields), we've instead seen a narrow consolidation centered on that same indecisive technical level.  There are a few moving parts to consider when attempting to anticipate the next move, but ultimately, the way yields move with respe...

Mortgage News Daily
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  • Bonds were set to begin the day in fairly unchanged territory when Trump tweeted about launching missiles at Syria and forcing Russia to try to shoot them down (here).  That was initially of some benefit to bonds just before the start of the domestic session, but it didn't create any lasting momentum.  After all, bonds still had to get through all of the events that would surely cause bigger ...

Mortgage News Daily
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  • Bonds were flat yet again in the overnight session, but began to improve after Trump tweeted "get ready Russia," missiles "will be coming" in response to rising tensions in Syria.  As can be seen in the following chart, this was somewhat of a big deal for bonds, and not much of a deal for stocks.  Ultimately, it took 10yr yields back in line with recent lows (slightly below, to be fair). The...

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  • For bonds (and almost for S&P futures as well), today was spent in roughly the same range as yesterday and well-within the range boundaries set by Friday's trading.  News stories are touting volatility in stocks.  While that may be true inasmuch as the magnitude of day-to-day changes, trading has been essentially flat since March 26th (2656 vs 2658 closing levels).   Bonds are also in a conso...

Mortgage News Daily
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  • Although today's 8:30am data has the trigger phrase "price index," it's not the price index you're looking for.  That will come tomorrow in the form of the Consumer Price Index (CPI).  Today's Producer Price Index (PPI)  measures the shift in input costs at the wholesale level.  PPI only ever matters if it coincides with an increase in CPI, so markets just assume wait for CPI when it comes to...

Mortgage News Daily
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  • Without any major events or data on the econ calendar, it was a calm and relatively inconsequential day for bond markets.  Yields stayed (mostly) inside the two narrowest technical levels from Friday afternoon (2.80% and 2.76%), but that wasn't looking like a done deal in the late morning hours. Treasuries were slightly weaker overnight and continued losing ground at the NYSE open in concert ...

Mortgage News Daily
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  • If you're a 10yr Treasury yield in 2018, you don't simply have free reign to enjoy yourself at yields under 2.80%.  That's a right and a privilege for which you'll have to fight.  2 weeks ago, heading into the end of March, it looked like you were up to the task.  But by the end of last week, it looked like you might be having second thoughts.  Will this be the week where you firmly decide if...

Mortgage News Daily
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  • It would be hard to have any discussion about important technical levels in 10yr Treasury yields recently without 2.79-2.80% coming up early and often.  This pivot point acted as a firm floor throughout March, finally giving way at the end of the month as trade war volatility worked its way through markets.  Stocks recovered earlier this week and bonds tagged along, moving back up and over 2....

Mortgage News Daily
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  • NFP came out much weaker this morning (102k vs 190k forecast).  That's a fairly weak reading, and a bigger "miss" than we normally see.  Importantly though, it's definitely not outside the realm of "bigger misses and beats."  Case in point, last month's reading was just revised up from 287k to 320k.  On the other end of the spectrum, September's numbers (reported in October) left NFP at a mer...

Mortgage News Daily
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  • I'm running out of ways to talk about trade-war-related headlines driving risk-on vs risk-off movement in stocks and bonds.  In case you've missed it, this simply refers to stock market losses heading into the end of last week in response to recent tariff announcements and the the corresponding trade war fear.  As stocks approached early February's 'flash crash' lows, bonds increasingly soake...

Mortgage News Daily
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  • The month of March was characterized by 10yr yields repeatedly bouncing at a floor of 2.80% in terms of 10yr yields.  At the time, I argued that--while we were indeed seeing 2018's first correction after the nasty little sell-off in the first 45 days of the year--there wasn't much by way of apparent justification for bonds to improve in a major way from there, given the many headwinds that wo...

Mortgage News Daily
Mortgage News Daily
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  • On a few occasions during the past few weeks, I've brought MBS underperformance to your attention.  Specifically, MBS and mortgage rates hadn't been improving as robustly as Treasuries since yields topped out back in mid-February (or again on March 21st).  A chart of Treasury yields vs mortgage rates shows Treasuries steadily declining (even if the pace is "moderate" at best) while mortgage r...

Mortgage News Daily
Mortgage News Daily
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  • Although preliminary news was out yesterday about China potentially announcing retaliatory tariffs on the US, that announcement was officially made overnight.  Actually, it was a borderline-comical catalog of announcements that ended including just about every US-to-China export that you might be able to imagine.  It was the "catalog" part that was comical, because the laundry list wasn't rel...

Mortgage News Daily
Mortgage News Daily
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  • Granted, it's an on-again, off-again relationship between stock prices and rates, but it's been "on" for the past few days.  Today was no exception.  Stocks were close enough to their recent, relative abyss that any further weakness would have broken key technical floors.  The resulting selling would have likely helped bonds continue to rally. Instead, stocks bounced.  They didn't bounce in g...

Mortgage News Daily
Mortgage News Daily
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  • Yesterday's recap focused on the on-again, off-again relationship between stocks and bonds.  Specifically, bonds don't always follow stocks or vice versa, but in the current case, excessive bouts of stock market weakness were unavoidably creating some buying demand in bonds.  In other words, even though I love to point out when the correlation is broken, it's not broken right now--even if it'...

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