Rates are a little higher this morning for the 10 yr note; 1.63% +2 bps. Late yesterday, similar to Monday, there was some selling in Treasury’s after 4:00 pm ET, at 4:00 pm ET the 10 1.59%, at 5:00 pm ET 1.61%. MBS prices in early trade this morning -3 bps from yesterday.

At 7:00 am ET this morning, weekly MBA mortgage applications composite came in at +1.1%, purchases -6% (on an unadjusted basis, the index increased 3 percent compared with the previous week). Refinances +5.0 (207 percent higher than the same week one year ago). Purchases continue to struggle with a lack of inventory and weather in many of the US markets (if you can’t see the roof or the condition of the exterior buying can be a high-risk decision).

MBA reporting yesterday that the delinquency rate for mortgage loans on 1-4 unit residential properties decreased to a seasonally adjusted rate of 3.77 percent of all loans outstanding at the end of the fourth quarter of 2019. The delinquency rate was down 20 basis points from the third quarter of 2019 and 29 basis points from one year ago. The percentage of loans on which foreclosure actions started in the fourth quarter remained unchanged at 0.21 percent. “The mortgage delinquency rate in the final three months of 2019 fell to its lowest level since the current survey series began in 1979,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Mortgage delinquencies track closely to the US unemployment rate, and with unemployment at historic lows, it’s no surprise to see so many households paying their mortgage on time.” Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding. By stage, the 30-day delinquency rate decreased 3 basis points to 2.17 percent, the 60-day delinquency rate decreased 5 basis points to 0.70 percent, and the 90-day delinquency bucket decreased 12 basis points to 0.90 percent.

Bernie won in New Hampshire, the one to watch though is Amy Klobuchar; she is gaining ground recently as a more centrist candidate than the others. Centrist voters could further splinter as yet a second moderate formally joined the race: former New York Mayor Michael Bloomberg, who didn’t compete in New Hampshire but will be on the ballot for the March 3 Super Tuesday contests. Bloomberg also needs just one more national poll ranking of at least 10% to qualify for a Las Vegas debate next Wednesday.

Jerome Powell is about to start his testimony at the Senate Banking Committee.

At 1:00 pm ET Treasury will auction $27B of new 10 yr notes, it will be interesting to see how the demand pans out and how the mortgage markets will respond. Usually, we don’t see much of a reaction initially, but a strong bid will support the idea that rates may regain their downward movements. Tomorrow it’s a 30 yr auction.

At 2:00 pm ET this afternoon, Jan Treasury budget is expected to show a monthly surplus of $11.5B, but still, the annual deficit will breach $1 trillion by the end of Sept. the 2020 fiscal balance.

Source: TBWS