Mortgage Market Update – May 26th, 2020
Good morning! Trust everyone had a relaxing long weekend.
Friday’s shortened session was largely devoid of excitement as both equities and US Treasuries barely moved. The week ended with the 10yr Treasury at .657%, or higher by just .017% since the Friday prior. Mortgage pricing was also pretty stable throughout the week as current coupons worsened in conjunction with their Treasury counterparts by just a handful of basis points.
Focus for the week (and weeks) ahead will remain on the progress of reopening the country, with any setbacks setting the stage for another move lower in yields. Another relevant storyline that recently emerged and warrants attention is the simmering tension between the US and China, specifically as it relates to the early handling of the COVID-19 outbreak. This could easily morph into another trade war iteration which is the last thing the fragile world economy needs right now.
Investors are starting this week with enhanced risk appetite on reports that yet another biotech company has begun human testing on a coronavirus vaccine. Equity futures moved sharply higher in the pre-market, while yields have climbed 1.5 to 3 basis points across the curve. The Conference Board’s consumer confidence survey will be released at 10:00ET this morning, offering contemporaneous insight on how Americans are viewing the current landscape. This along with New Home Sales (also out at 10:00) represents the day’s key data elements. Given the early move higher in yields, expect mortgage pricing to start the week a bit worse in price.
Have a great day, everyone.
Head of Capital Markets, Southern Trust Mortgage