Piper Sandler lowered the firm's price target on PennyMac Mortgage to $13 from $13.50 and keeps a Neutral rating on the shares. The firm notes the first quarter was a "tale of two halves" for the mortgage sector. Rates steadily improved through February, reaching 5.98%, before recent volatility drove them back to nearly 6.38%. Agency MBS spreads followed a similar trajectory. Spreads tightened 15 bps to 75 bps over the 10-year Treasury on positive GSE purchase commentary, but have since widened 25-plus bps to eclipse 100 bps. This reversal stems from volatility driven by the Iran War and shifting inflation expectations. Mortgage application data was solid through mid-March but has begun to stall in recent weeks, Piper adds. Mortgage applications rose 18% sequentially during a typically seasonal slow quarter, supported by both purchase and refinance activity.
