Bonds All Bid Up And Nowhere To Go

Bonds All Bid Up And Nowhere To Go

The second half of April had a handful of negative indicators for bonds.  These included declines in Fed buying, declines in coronavirus numbers, gravity-defying stocks, and a hefty dose of supply pressure.  Despite all that, MBS prices and Treasury yields continue to operate in narrow ranges just shy of record levels.  

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Sideways Momentum Staying Strong Despite Supply Outlook

MBS & Treasury Markets
UMBS 4.5 107.80 -0.06 10YR 0.630% +0.012% 5/4/2020 7:30PM EST
This is more of a heads-up regarding MBS being at the lowest prices of the day than an out-and-out reprice alert.  2.5 coupons are down an eighth of a point and 2.0s are down closer to a quarter point.  That said, only 2.0s have lost enough ground from morning rate sheet print times to be in reprice risk territory. As such, only the most aggressively-priced and jumpiest lenders would be considering reprices.  If you want to play the momentum game and treat t...   READ MORE
Today's Mortgage Rates
30YR Fixed 3.22% +0.03% 15YR Fixed 3.05% +0.04% 5/4/2020
Mortgage rates   moved down again today,  bringing the average lender to their best levels since the 2nd week of March.  Some lenders are quoting their lowest rates ever, but early March 2020 averages are still decidedly lower.  You may have seen other articles today claiming "all-time lows."  Some of those articles may even be quoting me (although they don't quote me in support of the "all-time low" headline).  Who's right?  In terms of...   READ MORE
Economic Calendar
Time Event Period Actual Forecast Prior
Monday, May 04
9:45AM Apr ISM-New York index Apr 826.5 849.3
10:00AM Mar Durables ex-transpt R mm (%) Mar -0.4 -0.2
10:00AM Mar Nondef cap ex-air R mm (%) Mar -0.1 0.1
10:00AM Mar Durables ex-def, R mm (%) Mar -16.0 -15.8
10:00AM Mar Factory orders mm (%) Mar -10.3 -9.7 0.0
10:00AM Mar Durable goods, R mm (%) Mar -14.7 -14.4
10:00AM Mar Factory ex-transp mm (% ) Mar -3.7 -0.9
Tuesday, May 05
8:30AM Mar International trade mm $ (bl) Mar -44.4 -44.0 -39.9
8:55AM w/e Redbook mm (%) w/e -12.6 -11.8
8:55AM w/e Redbook yy (%) w/e -9.3 -8.1
10:00AM Apr ISM N-Mfg PMI Apr 41.8 36.8 52.5
10:00AM Apr ISM N-Mfg Bus Act Apr 26.0 45.0 48.0
11:30AM 52-Week Bill Auction (bl) 65
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Investors buy and sell groups of mortgages that are pooled together in mortgage-backed bonds.  The price an investor is willing to pay for a mortgage bond is the primary factor in determining mortgage rates.  As demand for these bonds increases, rates fall (all other things being equal). As is the case for other types of bonds, such as US Treasuries, investor demand tends to increa... READ MORE