Market Alert 2024: Understanding Key Factors for Mortgage Rates Today

Last week concluded with the strategy of “buy the rumor, sell the news” appearing relevant as markets anticipated and then reacted to the Fed’s 50 basis point rate cut. While bond selling seemed to slow down by Friday, the new week has shown a renewed vigor in selling activities. This shift was likely influenced by the strong S&P Global Services PMI reported this morning.

It’s important to highlight that attributing the current bond market softness solely to “selling the news” might not be entirely accurate, especially since short-term rates have not experienced significant selling pressure. Instead, the yield curve has continued to steepen, with 2-year bonds performing better comparatively to 10-year bonds both before and after the rate cut. Prior to the Fed’s decision, the market witnessed bull steepening, meaning the 2-year yield decreased faster than the 10-year yield. Following the rate cut, the market has shifted to bear steepening, with the 2-year yield rising less than the 10-year yield.

Understanding the Dynamics of Mortgage Rates: Key Takeaways from September 20th Market Movements

Modestly Weaker But Mostly Uneventful

This week, the bond market exhibited remarkably low volatility compared to its potential fluctuations. Surprisingly, despite an eagerly anticipated Fed meeting, the daily bond market charts lacked significant spikes of interest. On Friday, the market experienced a lack of significant economic data, resulting in a slight weakening of bonds. Although it may seem like a case of “selling the news” following a “buying the rumor” phase, the minor weakness in 10-year yields only resulted in a few basis points change, keeping levels lower than at any time except for about a week and a half over the past year and a half.

Economic Data / Events

Jobless Claims

219k vs 230k forecast, 231k previous

Philly Fed Index

1.7 vs -1.0 forecast, -7.0 previous

Market Movement Recap

09:50 AM: Bonds dipped slightly overnight with further selling early morning. 10-year yield rose 3.4bps to 3.746%, and MBS fell 2 ticks (.06).

10:38 AM: Additional losses noted in the 10 AM hour. MBS dropped 5 ticks (.16) and 10-year yield increased

Latest Trends and Analysis in the Mortgage Rate Market as of September 20, 2024

Credit should be given where it’s due: the rate market performed exceptionally well in anticipating the Fed rate cut and the updated outlook from the Fed’s summary of economic projections (SEP). The SEP includes the “dot plot,” which depicts each Fed member’s expectations for the Fed Funds Rate over the next few years. The dot plot often instigates volatility in bonds and rates. However, this week it had minimal impact. In fact, the dot plot suggested slightly lower rates on the day of the Fed’s announcement, but Fed Chair Powell’s press conference later balanced things out. The result was an unusually stable mortgage rate reaction despite the potential for volatility. Although rates increased slightly on Wednesday and Thursday, a minor recovery on Friday left the weekly change almost unnoticeable, showcasing impressive stability given the circumstances. This stability indicates that the market had already factored in the Fed’s more favorable rate outlook, and significant changes in economic data would be necessary to provoke the next major movement. Early October typically provides crucial economic data, with a few important reports expected next week, mainly on Thursday and Friday.

Navigating Today’s Mortgage Landscape: Key Insights and Trends for 2024

Recently, someone asked if I had any plans for the fall. It took me a moment to understand they meant ‘autumn’ rather than the decline of society. The Autumn solstice arrives this weekend, and I’ll be traveling to Chicago and Lincoln, Nebraska to meet with mortgage industry professionals. Housing issues will undoubtedly be on the agenda. A rate cut by the Federal Reserve alone won’t resolve the complex challenges facing America’s housing market.

Concerns have arisen regarding new homeowners having their insurance canceled shortly after funding, often due to “roofing issues.” Yes, this is an ongoing issue. We’ve observed rising renewal costs, increasing new policy prices, a reduction in available carriers, and the use of drones for enhanced surveillance. It’s important to note that the insurance industry isn’t acting arbitrarily. Insurers have faced underwriting losses, increased replacement costs due to inflation, and hurdles from state-level insurance regulations that hinder market-appropriate pricing.

For additional insights, today’s podcast is available and this week’s sponsor is Visio Lending. Visio offers an excellent broker program and stands as the nation’s leading lender for buy-and-hold investors with over $2.5 billion in closed loans for single-family rental properties, including vacation rentals. Tune in to hear Rob and

Market Pulse: Key Insights from Today’s Mortgage Bond Trading Trends

For months, the financial world had been anticipating Wednesday’s Federal Reserve rate cut, and the 50 basis point reduction had become increasingly expected in the final days before the announcement. The old adage of “buy the rumor, sell the news” perfectly encapsulates this scenario. Leading up to the Fed’s decision, bond yields hit their lowest point in over a year, indicating strong market confidence in the rumored rate cut. However, the subsequent trading activity reflected only a mild reaction, suggesting the news was well-anticipated. As 10-year Treasury yields climb back above last week’s levels, it appears this market behavior is nearing its end, with future movements likely to depend on upcoming economic data.

Regarding the strong relationship between Fed Funds Rate expectations and the bond yields closely linked to mortgage rate trends, the extreme correlation remains evident.

Impacts of September’s Market Movements on Mortgage-Backed Securities

Mortgage-Backed Securities (MBS) have significantly outshined longer-term Treasuries recently. Contrary to many predictions, MBS prices have remained nearly unchanged since trading commenced on Wednesday. Despite experiencing some fluctuations—about an eighth of a point in either direction—prices today align closely with yesterday morning’s opening figures. The day’s economic data initially posed challenges, but MBS quickly overcame them. The MBS market benefited particularly compared to 10-year Treasuries, largely because MBS are currently acting more like shorter-term Treasuries, which saw a rally.

Key Economic Data and Events:
– Jobless Claims: 219,000 versus the forecast of 230,000 and the previous 231,000
– Philly Fed Index: 1.7 compared to a forecast of -1.0 and a previous -7.0

Market Movement Recap:
– 08:37 AM: MBS decreased by 0.06, and 10-year Treasury yields rose by 5.1 basis points to 3.754%
– 12:47 PM: MBS improved to only a 0.03 decline, with 10-year yields up 4.3 basis points to 3.745%

MBS Morning Update: Key Market Movements and Rate Trends for September 19, 2024

Following the recent Federal Reserve announcements, the overnight trading session remained notably calm, marking one of the quietest global market reactions given the scale of the previous day’s events. This quietude might reflect the Federal Reserve’s commitment to transparency or could indicate a finely balanced economic strategy. Today’s focus shifts to economic data, where Jobless Claims and the Philadelphia Fed report initially exerted upward pressure on interest rates. However, upon closer inspection, the Jobless Claims improvement appeared largely due to flawed seasonal adjustments, with non-adjusted data suggesting a potential deviation from recent trends.

Despite these fluctuations, mortgage-backed securities (MBS) returned to previous price levels, even though 10-year Treasury yields rose by 3 basis points. This relative stability in MBS can be attributed to yield curve trading and the inherently shorter duration of MBS compared to 10-year Treasuries. At present, MBS durations are more comparable to 5-year Treasuries, with some analysts even factoring in the impact of 2-3 year Treasuries. When evaluating day-over-day price changes, MBS are aligning closely with the performance of 3-year Treasuries, while 5-year Treasuries remain almost unchanged. In this context, MBS are

Understanding the Latest Trends in Mortgage Rates: September 19, 2024 Insights

Freddie Mac’s latest Primary Mortgage Market Survey has exacerbated an already challenging situation. The methodology behind Freddie Mac’s survey means that the reported rate reflects an average over the five days leading up to yesterday. While the early part of this timeframe recorded the lowest rates in over a year and a half, there has been a clear upward trend in the past two days. Recently, mortgage rates have climbed, with increases noted both yesterday and today.

Notably, the Federal Reserve’s announcement of a 0.50% rate cut did not yield the expected positive effect on longer-term rates such as mortgages. As previously predicted and advised, the focus was always on the Fed’s future rate guidance and Fed Chair Powell’s press conference, rather than the rate cut itself. The bond market, along with mortgage rates, anticipated the cut and preemptively adjusted, which is why rates were so low before the Fed’s announcement.

Unfortunately, there is a widespread but incorrect belief that the Fed’s rate cut was intended to lower mortgage rates. This misconception is likely to be further fueled by Freddie’s widely shared survey figures. It is important to clarify that mortgage rates had already reached their lowest point prior to the Fed’s rate cut announcement and have slightly increased in the last

Prognosticating the Future of Mortgages: Trends and Insights from Industry Experts

Imagine a scene where a Native American, a pirate, and a Frenchman walk into a bar. The bartender greets them with a mix of their languages: “Gentlemen, hau, arrrrrrr, oui, today?” The scenario unfolds on the final official Thursday of 2024 without anyone having to spell out “s-u-m-m-e-r”. Reflecting on the past year, one company clearly struggled through its financial challenges: Tupperware, the iconic brand known for its air-tight kitchen containers since 1946, has unfortunately filed for bankruptcy. It seems even the sturdiest containers can’t withstand the test of time and change.

In more uplifting financial news, the IRS managed to reclaim $263 million from a single individual thanks to information provided by three informants. They are set to receive a combined reward of $74 million, the largest award permissible by law, according to their legal representatives. After taxes, each informant could practically afford Michael Jordan’s mansion in Highland Park, although the property is already under contract.

In today’s podcast, sponsored by Visio Lending, a leader in the lending market for buy and hold investors, there’s an exclusive interview with Jeff Ball on the state of DSCR lending, touching on

Turbulent Trends: Analyzing the Market’s Reaction to Fed’s Latest Decisions

Bonds Decline Despite Fed’s Larger Rate Cut

Today, the Federal Reserve had the option of cutting interest rates by either 0.50% or 0.25%. They chose the larger cut, yet the bond market still lost ground. Two main factors contributed to this unexpected outcome: the dot plot and Fed Chair Jerome Powell’s press conference. While the dot plot was neutral, even slightly positive for bonds, Powell’s comments led to market reversal. He expressed minimal concern about the labor market, clarified that the 50bp cut is not a new standard, stayed cautious on claiming victory over inflation, and noted that the “neutral rate” remains considerably higher than pre-pandemic levels. Coupled with the bond market’s already aggressive stance heading into the Fed announcement, the moderately weaker closing levels were a predictable result.

Key Economic Data

Housing Starts: 1.356 million vs 1.31 million forecast, 1.237 million previous
Building Permits: 1.475 million vs 1.41 million forecast, 1.406 million previous

Market Activity Recap

08:34 AM: Bonds showed modest weakness overnight, with losses starting in Europe. MBS down 3 ticks (0.09) and