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For mortgage rates and the broader bond market, everything has been largely sideways in the big picture since the initial wave of bank drama in early March. Granted, there has been a lot of volatility within that broad, sideways range, but there has been no clear attempt to start a new trend higher or lower.
Today was just another day in the process. Rates happened to move higher from yesterday but remained very well controlled from the recent range. The most notable culprit was the news cycle surrounding First Republic Bank (one of the big names making headlines after the Silicon Valley bank failure asked investors “who’s next?”).
As investors decide whether First Republic (ticker FRC) is “next” or simply resigned to the fire sale of its assets, bonds (and thus, rates) responded to FRC’s apparent fate. Is. When the bank looks more likely to be able to sell and keep the asset, bond yields (aka “rates”) tend to go higher. Conversely, bad news for the bank lowers rates, all other things being equal.
The net effect of today’s headlines erased all the improvements seen yesterday. In other words, the average lender is back in line with Monday’s rates.
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