Morning Report: Bonds rally on Middle East tensions

Vital Statistics:


Last Change
S&P futures 3227 -30.25
Oil (WTI) 63.07 2.04
10 year government bond yield 1.83%
30 year fixed rate mortgage 3.95%


Stocks are lower this morning on tensions in the Middle East. Bonds and MBS are up.


The US killed an Iranian military commander in Iraq last night, which has sent oil prices up a few bucks, and the 10 year bond yield down to 1.83. The risk-off trade is in  full swing with equity markets falling and S&P futures down a percent. It is too early to tell if the market is overreacting (hint – it usually is) but you might get a window here to pull in some loans.  Might be a good time to review any refis that missed the boat last month.


We will get the minutes from the December FOMC meeting around 2:00 pm. Probably wouldn’t be market-moving on a normal day, but with the volatility from the Middle East situation all bets are off. Be careful locking around that time.


Foreclosure starts hit a 14 year low, according to Black Knight Financial. In November, 33,500 foreclosures were started, which was a 26% decline on a YOY basis. IIRC, there were weather-related issues that boosted the number last year, so that may be partially driving the drop. We did see a tick up in delinquencies, but they are still down 5% YOY. Prepays are more than double last year, which means the refi boom may still have some legs.


The Spring Selling season has historically kicked off right about Super Bowl Sunday. This year, it seems to be accelerating. In fact, some of the homebuilders are noting that traffic remains strong (Toll Brothers noted an acceleration through November and early December). “As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier,” said George Ratiu, senior economist at “With housing inventory across the U.S. expected to reach record lows in 2020, we expect to see this trend continue into the new year.”




Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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