Wednesday – November 20, 2024

UMBS are down 12 bps in the 2nd hour of trading, after opening down 15 bps.  Stock futures are up 12.75 points.

Which is odd because you would think there would be a “flight to safety” following reports that Ukraine is using British weapons for attacks within Russia.

Headlines to that effect began making the rounds at 9:20am and the result in trading levels and volumes was, once again, clear but modest. It was almost enough to help the bond market move back into positive territory after overnight weakness, but the rally has already met with resistance.

New home purchase applications rose 8.2% in October, compared to a year ago. “New home purchase activity picked up in October even as stronger economic data and election uncertainty pushed mortgage rates higher over the course of the month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.

Home prices rose 0.5% MOM in October, according to data from Redfin. On a year-over-year basis, prices rose 5.9%. “Many people—especially first-time buyers—were waiting until after the election to make a decision about buying a home,” said Redfin Senior Economist Sheharyar Bokhari.

The number of loans in forbearance rose 0.49% in October, driven primarily by the hurricanes in North Carolina. Approximately 65,000 more borrowers are in forbearance compared to one month ago

Granted, yields are only 3 days removed from hitting their highest levels in 5 months, but those levels weren’t much worse than November 6th.  If we treat this zone (call it 4.45% in 10yr yields, give or take 0.05%) as a potential ceiling, it received yet another vote of support with today’s very calm trading near 4.42%.

Geopolitical headlines were taken in stride (modest improvement) and 20yr auction results pushed back a bit in the afternoon.  Most importantly (not really), bond traders managed to stay someone engaged despite every news story, email, TV segment, etc. focusing on NVIDIA earnings.

UMBS closed the day down 10 bps at 98.87