UK T-BILL AUCTION RESULTS: 1/3/6-month UKTBs

MBA mortgage applications jumped last week as refis surged in response to a further decline in mortgage rates, building strongly on what had been signs of traction to lower rates in the week beforehand. It leaves the composite level of applications at their highest since April 2022. 

• MBA composite mortgage applications jumped 29.7% (sa) last week to build on a solid 9.2% increase the week before that.
• As tends to be the case with spikes, it was driven by refis surging 57.7% after 12.2%, whilst new purchase applications increased a much steadier 2.9% after a decent 6.6%.
• A comparison with 2019 averages for context: Composite at 82% vs 63% last week, purchases at 67% vs 65% last week and refis at 92% vs 58% last week.
• It came as the 30Y conforming rate fell another 10bp to 6.39% for a fresh low since early Oct 2024. Mortgage rates have now fallen 30bps over the past three weeks.
• US Tsy Sec Bessent last month talked on wanting to keep the spread between mortgage rates and treasuries flat or even bring it down.
• The spread to average 10Y Tsy yields over the week ticked up to 234bps (+3.7bps) after last week’s 230bps (-10bps) was the lowest since Mar 2022.
• The spread to 10Y swaps meanwhile ticked up to 287bps (+1.7bp after -8.2bp) but broadly holds what had been a narrowing in recent weeks from the 300 +/-5bp range seen since reciprocal tariff announcements in early April, having previously averaged 285bp in Q1.
• As for other mortgage details, the jumbo rate shifted from trading 5bp inside the regular rate to 9bps over, the most it’s been over since February.  

• 4,000 SFRV5 96.62 calls, 1.0 vs. 96.36/0.10% at 0711:01ET

• CBK (18/12/26 vs 18/06/27) 20p, bought the 2027 in 100k.

It is confirmed that the trade is good, and not a miss cross.