While FHFA reported a year-over-year increase in national home values in November, the Case-Shiller HPI saw flat annual growth as well as monthly decreases.

Treasury yields are stuck, but gold and the dollar are flashing unusual signals that could push rates after the FOMC, according to the CEO of IF Securities.

Gradual Weakness After AM Gains

Bonds began the day in weaker territory, but logged some solid gains in the first few hours. A small portion of the improvement could be arguably linked to the lowest Consumer Confidence reading since 2014 and the lowest “labor differential” of the present cycle (labor differential measures the spread between those who say there ample jobs available vs those who say jobs are hard to find). Shortly thereafter, yields began drifting higher. There was a barely noticeable bump toward weaker levels after a lackluster 5yr Treasury auction, but it could barely be distinguished from the typical random drift. 10yr yields refused to re-enter the sub-4.20% range. The Fed is on deck tomorrow, although with less than the normal amount of volatility potential (no dot plot, and near-zero odds of a rate cut or other policy shift).

Econ Data / Events

ADP Employment Change Weekly

7.75K vs 8.0K prev

consumer confidence

84.5  vs 90.9 f’cast, 94.2 prev

Labor Differential (jobs plentiful vs jobs scarce)

3.1 vs 5.9 prev
new cycle low

Market Movement Recap

08:15 AM Moderately weaker overnight with 10yr up 2bps at 4.233.  MBS are outperforming along with the shorter end of the yield curve. 5.0 coupons are starting out just 1 tick (.03) weaker.

12:53 PM Decent recovery in the 9am hour and flat since then. MBS up 3 ticks (.09) and 10yr up less than half a bp at 4.217

03:23 PM Off best levels, but gently.  MBS still up 1 tick (.03) and 10yr up 1.6bps at 4.229

The regulator, in an audit with the Department of Homeland Security, found almost 6,000 ineligible non-American tenants in the units it supports.

The $69 billion sale of two-year notes was awarded at 3.580%, more than a basis point below its yield at the bidding deadline.

The government mortgage securitization guarantor flagged the goal back during the first Trump administration, warning then that it would be a long-term project.

A record amount of equity is now held by property owners 62 and older, with a growing share transferring homes to their heirs and not putting them up for sale.

The estimated range for net income to common shareholders at the company formerly known as Ocwen rose in part due to a deferred tax asset valuation.

Small, Steady Gains and MBS Outperformance

It was a relatively quiet Monday for the bond market, but not a bad one. Treasuries were modestly stronger overnight and MBS opened a few ticks higher. Durable goods data was much stronger than expected, but had no discernible impact. 10yr yields hit their lows of the day at 10:30am and then drifted sideways at just slightly higher (but still positive) levels. MBS, on the other hand, continued making modest gains throughout the day. Part of this had to do with yield curve steepening (i.e. shorter term yields fell more during the day, and MBS align with Treasuries that are a bit shorter than the 10yr note with which they’re most frequently compared). But MBS also modestly outperformed even the 5yr Treasury yield–a fact that suggests some GSE bond buying may have contributed to spread tightening. 

Econ Data / Events

Core CapEx (Nov)

0.7% vs — f’cast, 0.5% prev

Durable goods (Nov)

5.3% vs 3.7% f’cast, -2.2% prev

Market Movement Recap

08:43 AM Slightly stronger overnight. Modest pull-back after Durable Goods. MBS unchanged and 10yr down half a bp at 4.226

12:17 PM 10yr down 1.3bps at 4.215 but off best levels of 4.203 around 10:30am.  MBS up 2 ticks (.06) and at best levels of the day, perhaps signifying some GSE purchases behind the scenes.

03:17 PM Sideways in Treasuries with 10yr down 1.9bps at 4.21.  MBS at highs, up an eighth of a point.

Mortgage rates trickled modestly lower again today for the 4th straight business day on Monday. The average top-tier 30yr fixed rate is the lowest it’s been since January 16th. The only catch is that it was quite a bit lower 2 weeks ago. Compared to today’s mark of 6.17% on MND’s daily rate index, mid-January lows ranged from 5.99 to 6.07%.  Note: in the following chart, 6.01 is the lowest mark, but in intraday terms, January 9th saw 5.99 for the better part of the day. [thirtyyearmortgagerates] There were no major source of volatility today and the week ahead is generally lacking in terms of potential sources. Even Wednesday’s Fed announcement is unlikely to have much of an impact this time around as the outcome is already fully priced in by financial markets. Specifically, the Fed is not cutting rates at this meeting and there’s not much they can say that hasn’t already been said multiple times in recent Fed speeches.