Statements on Market & Rates 2/22/21

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  • El_flasko

    Ultimate Member
    Industry Partner
    Nov 16, 2008
    7,298
    Abingdon, MD
    Rates got beat up last week but still sexy historically speaking. VA rates are still stupid low on their own. I’m going to start posting market updates from our in house Secondary Market head. His name is Hance and he’s brilliant. I occasionally have to break out the thesaurus even though I know this business, but the information is insanely on point. I think many folks here would appreciate the market info for purchase and Refinance information.

    Rates are still great for Refis and to be very honest, I, like many other lenders, are really backed up. It’s a good problem to have, but it’s making my return calls and new application work up turn times suffer a bit. This is NOT international and I’m working as fast as I can. PLEASE know this is just me being honest. Just wanted to say that.

    In addition, finding good OPs folks to help speed things up is insanely difficult which compounds the problem for all. If anyone knows solid Loan officers or mortgage processors please let me know ASAP.

    Thanks all and lots of useful information to come in a volatile market.

     

    El_flasko

    Ultimate Member
    Industry Partner
    Nov 16, 2008
    7,298
    Abingdon, MD
    From Hance at STM

    Friday’s have not been kind to rates of late, and this past Friday proved no exception. After digesting the three large Treasury auctions without too much trouble, the bond market should have been able to assemble something of a relief rally, but that’s not what occurred to close out the week. Treasury pricing was under pressure out of the gates (yields higher) following poor overnight price action. Buyers briefly emerged after a PPI print that held few surprises, but quickly disappeared and the selling resumed. Yields closed out the session 6 to 10 basis points higher at the longer end of the curve. The 10yr above 1.60% did not seem to cause much concern in equity markets as both the Dow and S&P added to their 2021 gains and achieved new all time high levels, up .90% and .10%, respectively. Current coupon mortgages did outperform their Treasury counterparts, but still ended the day 40 to 50 basis points worse in price.

    In the week ahead, the FOMC rate decision and policy update on Wednesday stands out as the key risk event. To date, while most Fed members have noted their surprise at the rapidity with which rates have risen, they have seemed content to “let nature run its course”, especially for as long as risk assets remain unaffected. With key equity indices at or near record levels, it’s a difficult case for the FOMC to make that intervention is currently required. As such, the most likely outcome for this week’s FOMC meeting is a policy that is little changed. Retail sales represents the other noteworthy data release this week—out tomorrow morning—and consensus currently expects a .5% decline month over month. Today’s calendar is devoid of anything meaningful.

    Overnight, equity futures have trended higher, with the Dow, S&P, and Nasdaq all looking to open in the green. Treasury yields have been bound by a basis point on either side of flat to Friday’s closing marks and are currently framed higher by .5 basis points. The market seems inclined to force the Fed’s hand by pushing rates higher, so for now that is the path of least resistance. Have a great day.

    Bottom Line: Rates trend higher ahead of Wednesday’s FOMC policy statement
     

    El_flasko

    Ultimate Member
    Industry Partner
    Nov 16, 2008
    7,298
    Abingdon, MD
    Statements on Market & Rates 2/22/21

    Just a FYI that although rates are not at historic lows right now, they are still in the 2’s for 15yr and low 3’s for 30’s for well qualified buyers/refis. VA rates are holding strong too!

    Here’s some nerdy info on the market :)

    From my man Hance...

    Risk assets were well bid to start the week, enjoying the residual buzz from Friday’s robust payrolls report. The opening slate of data yesterday looked to jeopardize the optimistic tone as Durable Goods and Factory Orders both missed consensus estimates. However, the ISM non manufacturing indices quickly stole the headlines with prints much stronger than expected—actually achieving new all time highs. Equities surged in the aftermath with gains pretty consistent across sectors as the Dow and S&P had new record closes. Interestingly, Treasuries did not suffer much selling pressure despite the risk-on tone. In fact, yields across the curve ended the day modestly lower. Mortgages performed extremely well with current coupons far surpassing their Treasury counterparts and closing out the session 25 to 35 basis points better in price.

    Equity futures have pulled back a bit overnight, but Treasuries remain fairly flat versus 5:00 closing levels. The economic calendar offers little save job openings data for February—we already know the employment picture is solid so this is unlikely to move the price action needle. Investors will continue following President Biden’s infrastructure proposal as it winds its way through Congress, passage of which should result in another (short term) economic pop. For now, 1.77% on 10s remains the high water mark with current flows suggesting a high hurdle to challenge that in the immediate future. Have a great day.
     

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