Monthly Archives: July 2015

MBS Day Ahead: Closer Look at Changes in Yield Curve

Posted To: MBS Commentary

Yesterday's recap mentioned a 'farewell' to low short term rates despite longer term rates 'faring well.' This is a reference to the major changes that have been taking place with the yield curve in July. But just what the heck is the yield curve? If you're familiar with the yield curve, thinking about it is fairly second nature, but it takes some time spent thinking about it before that happens. If it's second nature for you, feel free to skip to the chart. If it's not second nature, don't worry, it's not that bad . I find the easiest way to think of the yield curve is to forget the curve part. Forget thinking about it as a line on a chart. After all, if you do that, you'll be left with this same, boring, fairly meaningless chart that always pops…(read more)

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Source: Mortgage News Daily

MBS RECAP: Longer Term Rates Fare Well, as Low Short-Term Rates Say Farewell

Posted To: MBS Commentary

As of mid-July bond markets seem to have put their foot down with respect to the relationship between long and short term rates. With the economic recovery and global growth outlook still open to debate–not to mention with global QE efforts ongoing–it makes sense for longer term rates to maintain a reasonable level of sponsorship. This is in line with the cries we often here for the economy being unable to sustain much of a run higher in rates. Such a run would seemingly be in contradiction to the Fed's stated intention of raising rates, but trading levels continue to show us how both can live in harmony. Let's not forget that earlier this year, 2yr yields and 10yr yields were as close together as 120bps. Today they're only 153bps apart after being closer to 180bps earlier this…(read more)

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Source: Mortgage News Daily

Mortgage Rates Stay Steady After GDP

Posted To: Mortgage Rate Watch

Mortgage rates were very close to unchanged despite market volatility surrounding the release of today’s GDP figures. GDP can occasionally cause a significant response in mortgage rates, and that’s especially true of the “advance” release. That’s due to the fact that the “advance” release is the first look at GDP for any given quarter. Subsequent releases merely revise the previous quarter’s result. Moreover, the Commerce Department implements revisions once a year that greatly affect past GDP reports. So not only are we getting the first look at last quarter’s GDP, but also a potentially significant revision to GDP numbers over the past 2+ years. Today’s revisions painted a generally weaker picture of economic growth since 2012. But the most recent quarter showed slightly stronger inflation…(read more)

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Source: Mortgage News Daily