Fed Minutes and LLPA Hangover Hurting Rates

Mortgage rates have been quite rebellious in 2020 when it comes to the guidance offered by the elders that typically tell them what to do.  Treasuries and MBS may be saying "go lower" but rates have been reluctant to listen.  Last week's LLPA drama only made that issue worse.  The effects from that are lingering and now today, bonds gave up gains after the Fed said it wasn't interested in yield curve control. We need to see some evidence of strength either in bonds or mortgage rate margins before feeling like taking more lock/float risk.

Econ Data / Events
Market Movement Recap
09:09 AM

Bonds were gradually stronger overnight before flattening out during European hours.  They've been broadly sideways since then with 10yr yields about 2 bps lower and UMBS 2.0s about an eighth of a point higher.

01:06 PM

20yr auction 1.185 vs 1.173 f'cast. Slightly weak. Hard to say how weak as the other stats haven't yet been established (i.e. past averages of bid-to-cover, etc.), but on a letter scale, maybe a B-. This is behind the modest weakness in right now.  10yr is nearly unchanged and MBS are now up only 4 ticks (.125) vs 5 ticks (.16) before the auction.

02:28 PM

Noticeably weaker after Fed minutes.  Traders are focusing on Fed's negative attitude on yield curve control (rate caps) despite no other significant surprises in the release.  10yr yields up almost 2bps and 2.0 UMBS turning negative on the day.