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Strong in The AM, Weaker in The PM Bonds improved fairly steadily in the AM hours.  After an initial glut of buying demand in the first hour of trading, there was a linear trend channel to the best level of the day right at noon ET.  After that, a similarly linear trend took bonds back toward (but not into) weaker territory.  None of the above occurred outside a range that we'd consider anything other than uneventful.  Overseas data and trading likely helped play a role in the ebb and flow.  The 3yr Treasury auction didn't have a big impact, but concession-building for tomorrow's 10yr auction could have contributed to the afternoon weakness.  Market Movement Recap 09:31 AM modestly stronger overnight with better buying after the 8:20am CME open.  MBS up 5 ticks (.16) and 10yr down 4bps at 4.445 11:44 AM Best levels of the day with MBS up 6 ticks (.19) and 10yr down 6bps at 4.425 01:54 PM No major reaction to 3yr auction.  MBS still up 6 ticks (.19).  10yr down 4.1bps at 4.445 02:43 PM steady weakness in the PM hours, but still stronger on the day. UMBS 6.0 still up 6 ticks (.19), but down an eighth from the highs.  10yr still down 2.8bps at 4.458 but up almost 4bps from lows. 04:04 PM Modest bounce keeps bonds safely green in the final hour.  MBS up 6 ticks (.19) and 10yr down 3.3bps at 4.454

There have been 3 winning streaks for mortgage rates in 2024 where the average rate has moved lower for at least 5 days and where the conventional 30yr fixed rate has fallen by more than 0.25%.  Before today, there were only two.   The present example didn't receive a notable boost from its 5th consecutive day of improvement, and that improvement wasn't readily linked to any obvious root cause in terms of data, news, or events.  In some ways, the bond market's friendly momentum from last week was simply still running its course due to overseas holiday calendars. Specifically, European markets were closed yesterday.  That means they had yet to trade their reaction to Friday's jobs report in the US.  Naturally, Europe is a different continent, and US rates care more about US markets.  But there is always some correlation and spillover between the world's major bond markets with gains in Europe often coinciding with gains in the US.  In terms of MND's daily index, conventional 30yr fixed rates are back under 7.25% for top tier scenarios after being just over 7.5% last week.

Lynyrd Skynyrd sang, “Sweet home, Alabama, where the skies are so blue…” Through the wonders of airship transportation, today I’m off to Alabama. The skies won’t be blue all the time with some rain in the forecast, but that won’t stop attendees at the conference learning about reigning in credit costs, why rates are doing what they’re doing, and artificial intelligence. I am sure that some of the talk will involve politics and bureaucracy, speaking of which, here’s an opinion about the CFPB: Why does one unelected bureaucrat get to decide credit card fees? There’s also the servicing angle: Our biz is concerned about how the Consumer Financial Protection Bureau’s latest supervisory highlights may impact borrowers’ trust in their mortgage service providers, specifically Regulation X, Regulation Z, unfair, deceptive, and abusive acts or practices, and what the bureau deems as "junk fees." (Found here, this week’s podcasts are sponsored by Matic, the digital insurance marketplace built for the mortgage industry. Matic integrates home insurance shopping into the lending and servicing experience, allowing customers to shop carriers and find a policy in minutes. Create a new revenue stream that boosts customer happiness today! Hear an interview with the MBA’s Joel Kan on all the latest trends across the mortgage industry, from profitability and predictions to margins and volatility.) Lender and Broker Software and Services Exclusive for ICE Mortgage Technology’s customers, the best and most valuable sessions from ICE Experience 2024 are now at your fingertips, online and free now through May 31. Log in to view everything from inspiring keynotes and compelling fireside chats to popular breakout sessions and panel discussions. This content is only available for a limited time, so start watching now to catch all the sessions most important to you before they are gone. Register here for access.

The theme of "waiting" amid an empty calendar will be played out by the end of the week (if it's not already played out from most of the past year spent waiting for only a handful of key events each month). Despite a few scattered events on today's calendar, none of them are worth any significant potential volatility for bonds.  Without big ticket data, other considerations become a bit more visible in terms of their impact on trading levels.  In today's case, it's the return of European markets after a 3 day weekend.  Weaker PMI data in Europe helped bonds overnight and US traders have added to the gains in the first few hours. In the slightly bigger picture, however, we see that it requires a microscope to draw any conclusions from this morning's movement and its relationship to the present trend. Also recall yesterday's commentary regarding the range set by the April 10th CPI reaction, and the assertion that this would be a logical place to wait for the next CPI release.  Against this backdrop, this morning's moderate improvement only brings bonds closer to the center of that range.

Uneventful Start to What May be an Uneventful Week Without any big ticket events or major news headlines, it was no surprise to see bonds bounce around in a narrower sideways range.  Data-free Mondays are often superfluous when it comes to informing the big picture and today was no exception. It might have been even narrower if not for holiday closures in the overnight session (lower volume and lighter liquidity can increase volatility, all other things being equal).  MBS underperformed Treasuries in a small but obvious way (MBS lost ground while Treasuries improved), but we're not reading much into that just yet.  This week's only hope for inspiration is the Treasury auction cycle--at least in terms of scheduled events--and that means we're probably waiting for May 15th CPI for the next big dose of volatility. Market Movement Recap 09:53 AM Slightly stronger at the open, but backtracking in the past hour.  MBS up 1 tick (.03).  10yr down 1.1bps at 4.503. 11:09 AM Weakest levels of the morning with MBS down 1 tick (.03) and 10yr up only half a bp at 4.509. 02:56 PM MBS underperforming, still at weakest levels, down 2 ticks (.06).  10yr down 2.3bps at 4.489