Mortgage rates have been quite rebellious in 2020 when it comes to the guidance offered by the elders that typically tell them what to do.  Treasuries and MBS may be saying “go lower” but rates have been reluctant to listen.  Last week’s LLPA drama only made that issue worse.  The effects from that are lingering and now today, bonds gave up gains after the Fed said it wasn’t interested in yield curve control. We need to see some evidence of strength either in bonds or mortgage rate margins before feeling like taking more lock/float risk.

Market Movement Recap

09:09 AM

Bonds were gradually stronger overnight before flattening out during European hours.  They’ve been broadly sideways since then with 10yr yields about 2 bps lower and UMBS 2.0s about an eighth of a point higher.

01:06 PM

20yr auction 1.185 vs 1.173 f’cast. Slightly weak. Hard to say how weak as the other stats haven’t yet been established (i.e. past averages of bid-to-cover, etc.), but on a letter scale, maybe a B-. This is behind the modest weakness in right now.  10yr is nearly unchanged and MBS are now up only 4 ticks (.125) vs 5 ticks (.16) before the auction.

02:28 PM

Noticeably weaker after Fed minutes.  Traders are focusing on Fed’s negative attitude on yield curve control (rate caps) despite no other significant surprises in the release.  10yr yields up almost 2bps and 2.0 UMBS turning negative on the day.


MBS Pricing Snapshot

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

MBS

UMBS 2.0

103-06 : +0-01

Treasuries

10 YR

0.6850 : +0.0160

Pricing as of 8/19/20 4:41PMEST

Today’s Reprice Alerts and Updates

2:21PM  :  ALERT ISSUED: Fed Minutes Not Helping; Negative Reprice Risk Remains

1:30PM  :  ALERT ISSUED: MBS Losing Ground After Fed Buying Session; Reprice Risk Rising Modestly

10:09AM  :  Calm Morning. Gains Run Into Resistance


Economic Calendar

Time Event Period Actual Forecast Prior
Wednesday, Aug 19
7:00 MBA Purchase Index w/e 308.9 306.6
7:00 Mortgage Refinance Index w/e 3809.7 4025.0
14:00 FOMC Minutes *
Thursday, Aug 20
8:30 Philly Fed Business Index * Aug 21.0 24.1
8:30 Continued jobless claims (ml) w/e 15.000 15.486
8:30 Jobless Claims (k) w/e 925 963

By Matthew Graham , dated 2020-08-19 16:43:35

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Courtesy of Mortgage News Daily

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