Good Thursday AM from your Hometown Lender,

The bond market has shifted back after a few very strong days last week and to start this one.

Since Monday afternoon, bonds have been taking it on the chin as thoughts of an emergency Fed meeting dissipate and volatility start to come back down. The Treasury auctions this week went badly. Rates at the end were higher than at the beginning. That means there were not a lot of buyers for Treasury bonds. If there are fewer buyers for Treasuries, it will flow through to a lack of buyers for mortgage bonds as well.

The weak data from last week is of course still a driving force but the external factors of unwinding currency trades which pushed markets into a fear frenzy have settled. Equity markets have rebounded a bunch (although not completely) over the last few days and that means some money has left bonds.

Today’s unemployment claims data caused an oversized reaction.

The claims were marginally lower but with the risk-on trades, bonds have taken it a bit on a hit again. The 10-yr note is sitting at 4.00% which is an important inflection point. If we can close below it, we can likely test 3.92 and then back into the 3.80’s. if we fail to close below 4.00%, the next stop heading north will be 4.11%. There is no news tomorrow and if you are looking for better rates, you will have to wait until CPI next week.

Stay safe, and make today great!