by Calculated Risk on 4/14/2025 02:49:00 PM

From housing economist Tom Lawler: Update on Mortgage/MBS Rates and Spreads

On April 4th, the day after Trump’s “Liberation Day” tariff announcement, the so-called 30-year “current-coupon” MBS yield closed at 5.34%, its lowest level since the middle of last October. Last week’s bond market debacle, however, hit the MBS market especially hard, and the current-coupon MBS yield closed the week at 5.93%, its highest level since the middle of January.

Obviously a major catalyst for the surge in MBS yields was the sharp increase in intermediate- and long-term Treasury rates. Putting additional upward pressure on MBS yields was the surge in market-implied interest-rate volatility. For example, the ICE BofAML MOVE Index, which is a measure of implied interest rate volatility derived from options on Treasury securities across the yield curve, jumped to 137.26 last Friday, its highest level since May 2023 and up sharply from 101.35 at the end of March.

Finally, a widely-followed measure of the CCMBS option-adjusted spread to Treasuries from Yield Book increased by about 12 bp last week.

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