Mortgage Rates Fall Back Below 7%

Last Friday was notable in that it was the first day since February 19th where the average top tier 30yr fixed mortgage rate ended the day over 7%. Last week was also notable for ranking among the more abrupt weeks for rising rates over the past few years. Things are getting off to a friendlier start in the present week with the 30yr fixed rate index edging back below 7%–roughly in line with levels seen last Wed/Thu.   As is true for most markets at the moment, the bond market (which underlies mortgage rate movement) continues a general pattern of reacting to developments on tariffs and fiscal policy. Friday evening’s updates on tariff exclusions for certain tech-related imports helped bonds set up for today’s lower rates.   Despite the improvements today, rates remain at risk of higher potential volatility as fiscal details continue coming into focus. 

Rough Week For Bonds. No Help From Friendly Data

Rough Week For Bonds. No Help From Friendly Data

Bonds managed to recover modestly after the initial yield spike in the morning hours, but nonetheless earned the honor of seeing the biggest week over week jump in 10yr yields since 1981 (note: some outlets are saying 2001 or 1987, but we’re not seeing that, and it doesn’t really matter.  It was a rough week, is the point). Looked at as a 2 week time frame, and it was on par with many other recent examples of moderately brisk selling.  That leaves the upcoming week and a half in a great position to let us know how freaked out we should be. 

Econ Data / Events

Core MM PPI

-0.1 vs +0.3 f’cast, 0.1 prev

Core YY PPI

3.3 vs 3.6 f’cast, 3.4 prev

Consumer Sentiment

50.8 vs 54.5 f’cast

1yr inflation expectations

6.7 vs 5.0 previously

5yr inflation expectations

4.4 vs 4.1 previously

Market Movement Recap

09:34 AM Losing ground despite softer PPI.  MBS down more than a quarter point and 10yr up 6.4bps at 4.496

12:51 PM Nice reversal off weaker levels.  MBS now down only an eighth  and 10yr up only 2.2bps at 4.45

02:35 PM Fizzling sideways now.  MBS down 7 ticks (.22) and 10yr up 6.7bps at 4.499