10-Year Yield Closed Near 2.50% Friday


Market Views from Doug Wilken -- 4/8/19

Video recording of commentary: http://www.ratewatch.com/ratewatchnow.html

Happy Monday! The 10-year yield closed near 2.50% Friday versus 2.51% the previous day; the Dow gained 40 points and MBS improved 22 bps. This morning the 10-year yield is around 2.51% and the yield curve is maintaining current trend with the 3-month yield steady around 2.43%. The middle of the curve is still inverted with 5-year at 2.32%. The 10-year has an initial floor and ceiling around 2.47% and 2.55%. A more important floor is around 2.40% with a ceiling around 2.58%-2.60%.

In another sign of a slowing manufacturing sector, factory orders for January missed forecast. New orders increased 0.1% vs forecast of 0.3%. Factory orders increased 3.8% compared to January 2018. Shipments of goods decreased 0.4% fourth consecutive month of decreasing activity and worst since mid-2015.

Key economic reports this week include consumer price index on Wednesday, producer price index on Thursday and consumer sentiment index on Friday.

FOMC minutes will be released on Wednesday afternoon and could give additional insight into discussions during FOMC last month.

The Modern Mortgage Loan Originator uses Mortgage Coach and RateWatch

Cost of Waiting Analysis

-- Home Value annual increase 4% - 5% based on variety of reports including NAR, Case Shiller and MBA.

-- Mortgage rate environment flat for the next 3 months; points increase .4 at 3 months; rate increase .125% at 6 months and 12 months. Long-end of curve could stabilize based on economy. MBS and mortgage rates less apt for dramatic moves.

Cost of Waiting TCA with 30-year FRM at three, six- and twelve-month future periods (updated 4/2): https://mcedge.tv/1ceubg

Borrower discount points and Seller Concession in lieu of Price Reduction

-- Average sales price reduction is 3% - 5% versus asking price.

-- 30-year FRM relative price versus 10/1, 7/1 and 5/1 ARMs through 1 point in discount stack.

-- ARMs currently escalate more deeply at 2% discount by .125% to .25% in rate versus 30-year FRM

Seller Concession TCA with concession used within discount points to lower the interest rate (updated 4/2): https://mcedge.tv/1ceut3

Seller Concession TCA including ARMs with concession utilized by borrower at 2% discount (updated 4/2): https://mcedge.tv/1ceu87

Borrower paid discount TCA 30-year FRM at PAR, 1% and 2% discount; 10/1 ARM at 2% discount (updated 4/2): https://mcedge.tv/1ceu98

Rent versus own TCA including worsening rates and increasing rent: https://mcedge.tv/1celkq

Have a great day!