The Fed’s Hawk-Dove Spectrum

May was a tough month for mortgages and Treasuries, which caused mortgage rates to rise about .5% during the month. And this first trading day of June started more favorably then reversed about an hour ago—MBS are in the red again, with the benchmark Fannie 30yr 3.5% coupon down 5 ticks or 16 basis points. Lenders are repricing rates for the worse as a result.

MBS take some cues from the 10yr Note longer term, and the current technical resistance and support levels for the 10yr yield are 2.07% to 2.24%. Right now the 10yr is trading roughly in the middle of the range at 2.13%.

Refinances are starting to look less favorable, so those folks who’ve been waiting will want to take note. As for purchases, higher rates might lessen demand which could be a blessing in disguise for buyers in heated markets where every home is getting multiple offers.

Also here’s an interesting table about the Fed’s rate policy bias from some catch up reading I was doing this weekend. It’s from a Bank of America Merrill Lynch (BAML) research report. For more color on this topic of how different Fed members vote on rate policy, also see this piece:

Which Fed Members Want To End Bernanke’s Low Rate Party

FedHawkDoveSpectrum

FedHawkDoveQuotes

$TNX, $TLT, $TBT

 
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