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Posted To: MBS Commentary

Remember early 2018 when the fear was compounded by this list of bad actors? increased Treasury issuance to pay for the revenue shortfall in the new tax bill the upside economic/inflation potential created by the new tax bill A Federal Reserve that was increasingly intent on hiking rates and increasingly willing to decrease the size of its balance sheet (aka, bond buying) Foreign central banks that were tiptoeing ever close to their own "taper tantrum" moments It was enough to send 10yr yields quickly over 3% by May 2018. Then the Italian political drama reminded markets that things could still go wrong. Tariff uncertainty added to that sentiment and bonds sneaked through the summertime months without much of a fuss. Enter September. We knew September could bring a sea-change to the...(read more)

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9/18/2018 2:17:32 PM

Posted To: Mortgage Rate Watch

Mortgage rates edged up to 4-year highs with yesterday's bond market losses and things went from bad to worse today. Bond markets (which underlie and directly affect rates) are under extreme pressure today and have generally had a very bad September. Weakness in bonds equates to higher rates. So why are bonds weak? In part, this is weakness that was expected way back at the beginning of the year as the tax bill came to fruition and as economic data continued to suggest ongoing expansion. Given that the inflation/growth outlook was a whole lot worse in 2013 and early 2014 when 10yr Treasury yields briefly crested 3.0%, it stood to reason that those same yields would almost certainly need to move well over 3.0% this time around (inflation/growth are key factors in Treasury yields and rates in...(read more)

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9/18/2018 1:35:00 PM

Posted To: MND NewsWire

Builder confidence in the market for newly-built single-family homes stabilized a bit in September. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which has been wobbly in recent months, retained its August reading of 67 in September. The two months are tied at the lowest level of the index so far this year. "Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market ," said NAHB Chairman Randy Noel. "The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced." Derived from a monthly survey that NAHB has been conducting...(read more)

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9/18/2018 8:29:14 AM

Posted To: MBS Commentary

Not to be confused with the Red Sea, which is an actual place, the sea of red in the title is merely a reference to general bias toward weakness in bond markets for however long you care to look back in time (provided you don't look back more than 2 years). Most pressing is the time frame between now and the end of August which has seen 10yr yields rise nearly 20bps. That makes the past 3 weeks the worst selling spree since April, and introduces yet another attempt to break free from the gravitational pull of 10yr yields at 3%. Bond bulls hope to see gravity kick in at the teal line in the following chart. The manner in which it's been approached suggests we shouldn't take such support for granted, but neither can the technical significance of the 3% zone (3.015% specifically, over...(read more)

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9/18/2018 7:14:24 AM

Posted To: Pipeline Press

TRID 2.0: mandatory compliance on 10/1 is only a few weeks away. Temenos has a primer on it , as does Qualia . The MBA had a piece on it . The NY MBA has a webinar next week. In Michigan the MMLA has a seminar on it this week. Hopefully everyone’s up to speed already. Lender Products and Services Stearns Wholesale helps brokers grow and brand their business with social media. Marketing Tools for SNAP 2.0 now offers Social Media Graphics for our most popular products and services. This marketing portal allows you to create personalized marketing pieces to help you extend your reach, grow your customer base and brand your business. Customizable flyer and social media templates can be personalized for both business-to-business and consumer relationships. It’s Easy! We provide the flyers...(read more)

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9/18/2018 6:41:54 AM

Posted To: MBS Commentary

10yr yields briefly hit their highest levels since May 23rd this morning after one large trade started a snowball sell-off in Treasuries. Before that, modest weakness was already intact. "A snowball sell-off to 4-month highs" sounds a bit more dramatic than the actual scope of weakness. At the worst moments of the day, we were still looking at less than 3bps of losses in 10yr yields. It didn't take long for buyers to take advantage of the yields, even though traders were contending with another big day of corporate bond issuance . Making the rally slightly less impressive was the fact that stocks were selling at the same time, potentially adding a risk-off component to the move. Ultimately, 10yr yields weren't willing to dip back below the 2.99% technical level and Fannie...(read more)

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9/17/2018 3:06:55 PM

Posted To: Mortgage Rate Watch

Mortgage rates may have had a fairly bad day last Friday, but today was worse . Today officially saw the average lender back at rates not seen since May 17th, 2018. That date might not seem too far away, but at the time, it marked the highest rates since late April of 2011. In other words, today's rates matched 7-year highs. If there's a saving grace , it's the fact that underlying bond markets were able to improve throughout the day without most mortgage lenders adjusting rate sheets accordingly. In other words, if bonds are in the same territory by tomorrow morning, the average lender would be offering slightly lower rates. The other potential saving grace is that rates have had a bad enough moving streak that they're increasingly likely to catch a break simply due to the normal cadence of...(read more)

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9/17/2018 2:39:00 PM

Posted To: MND NewsWire

The robust growth in the economy in the second quarter may be the final peak of this expansion according to Fannie Mae's Economic Development Report for September. Initial data indicates the 4.2 percent growth last quarter appears to be moderating to the estimated third quarter gain of 3.2 percent predicted in the August report. All factors considered, including inventory restocking and increased government spending leads Fannie's Economic and Strategic Research Group (ESR) to expect full-year 2018 growth of 3.0 percent before a slowdown to 2.3 percent in 2019 as the fiscal stimulus runs its course. ESR expects consumer spending and business fixed investment growth to moderate but remain at a solid pace but expect that trade will drag on growth. Second quarter growth had benefitted in part...(read more)

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9/17/2018 1:11:14 PM

Posted To: MND NewsWire

There were quite a few recent milestones, high and low, noted in the Quarter 2 Residential Property Loan Origination Report from ATTOM Data Solutions. The report covers the 2.09 million 1 to 4 unit residential loans originated during the quarter, an increase of 15 percent from the first quarter but only 1 percent more than a year earlier. One striking finding was the increase in the size of downpayments during the quarter - a median of $19,900, a record high in data going back to the first quarter of 2000. This is a 19 percent increase from $16,750 in the previous quarter and 18 percent from $16,925 in the same quarter last year. At a percentage, that represents 7.6 percent of the median sales price of the homes purchased with a mortgage during the quarter, compared to 6.6 percent in both of...(read more)

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9/17/2018 9:00:50 AM

Posted To: MBS Commentary

September continues to be an unfriendly month for bonds, marked by an unfriendly trend that has carried yields almost exclusively higher. Some of the weakness can be chalked up to pent up selling demand that was on hold through the end of August, but economic data and supply situation (lots of bonds being issued by the time we count corporate debt ) are responsible for the lion's share of the movement. Case in point, even with trade war fears, geopolitical uncertainty, and the Fed Funds rate rising just as quickly as markets expect, August still managed to offer up the highest readings in years in Manufacturing and Consumer Sentiment. Core inflation may have missed its forecast, but nonetheless remained over the 2% target. Wage growth rose to a post-crisis high in year-over-year terms,...(read more)

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9/17/2018 7:18:29 AM

Ken Flory, Bennion Deville Homes 760-485-2123 or email: flry7@aol.com  California BRE Lic#01361850


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