Slow, Sideways Start After Overnight Weakness

Bonds are finding their range in a perfectly inoffensive way to begin the new week.  That’s a victory considering a bit of weakness is never a surprise at the start of Treasury auction weeks, but then again, current trading levels represent a modest amount of weakness versus the recent yield lows in late June.  The overnight session was indeed slightly weaker, but domestic traders quickly got things back to “unchanged” after the 8:20am CME open.  There are no big ticket economic reports on tap.  Apart from Fed Chair Powell’s semi-annual congressional testimony (Tue/Wed), there’s not much to do except wait for Thursday’s CPI.
Source: Mortgage News Daily

Orderly, Logical Rally as Bonds Reiterate Data Dependence

Orderly, Logical Rally as Bonds Reiterate Data Dependence

Today’s recap isn’t any different than the morning commentary.  The jobs report was demonstrably softer than the previous installment across the board, despite the top line nonfarm payroll count being just a hair higher than expected for the most recent month.  By the time revisions are considered, the labor market trend went from looking alarmingly resilient to predictably softer.  In other words, this is the jobs report trend that conventional wisdom expects with interest rates at these levels. The bond market took the opportunity to calmly confirm its adherence to the Fed’s “data dependent” guidance with an orderly rally of moderately large size.  All in all, it was a perfectly agreeable jobs report day, and one that leaves a blank canvas for next week’s CPI data.

Econ Data / Events

Nonfarm Payrolls

206k vs 190k f’cast
last month revised down to 218k from 272k

Unemployment Rate

4.1 vs 4.0 f’cast, 4.0 prev

Wages

0.3 vs 0.3 f’cast, 0.4 prev

Market Movement Recap

08:47 AM Modestly stronger overnight with additional gains after NFP.  10yr down 6.2bps at 4.298.  MBS up 6 ticks (.16).

11:26 AM best levels of the day.  10yr down 8.3bps at 4.277.  MBS up 9 ticks (.28).

03:20 PM Drifting sideways at best levels, perfectly in line with the previous update.
Source: Mortgage News Daily

Mortgage Rates End Week Lower Thanks to Jobs Report

The average top tier 30yr fixed rate may not be back under 7% just yet, but as of Friday, it is back below the levels seen last Friday.  That fact is at odds with major weekly rate surveys which showed a somewhat significant increase, but those surveys came out before today’s jobs report. Officially known as The Employment Situation, the jobs report is one of the two most important pieces of scheduled monthly economic data in the U.S.  Econ data is always important, but that’s doubly true these days as the Fed and the market waits for confirmation that economic growth and inflation are slowing down enough for the Fed to cut rates.   The market often moves well in advance of the Fed when it comes to rates.  Today’s jobs report wasn’t especially weak, but it represented an obvious downshift compared to last month’s installment.  The bond market agreed as traders pushed yields moderately lower in the AM hours. Bonds dictate mortgage rates.  Falling yields coincide with falling mortgage rates.  Again, today’s move wasn’t big, but it was important in the sense that it leaves the door open for another major economic report to send an even clearer message about progress toward the Fed’s rate cutting goals.  That report–the Consumer Price Index (CPI)–comes out next Thursday morning.
Source: Mortgage News Daily

AE Jobs, CU Patelco Ransomware Attack; Fed Primer; Jobs Data Nudges Rates Lower

Before the internet, everything worked fine without it, right? Just ask the members, whether they be depositors or borrowers, of credit union Patelco, the scene of the latest (known) hack attack. Yes, it is a good reminder for companies to continue to beef up their computer systems, and have a plan in place should something happen. It is also a reminder for anyone with their money in a bank or credit union to have some of their money at a different institution. The news isn’t much better for lenders in general: According to Curinos, June 2024 funded mortgage volume decreased 13 percent year-over-year and decreased 5 percent month-over-month. The average 30-year conforming retail funded rate in June 2024 was 7.11, 1bps higher than May 2024 and 66bps higher than the same month last year. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. We drill into this data further here. (Today’s podcast is found here and this week’s is sponsored by Bundle, the attorney-prepared legal documents company that is dedicated to the real estate, mortgage, and title industries. Fuel your operations and execution of documents from deeds to subordinations to assignments, and everything you need for any order, in one bundled price; receive 20 percent off using the code “Chrisman” at checkout. Hear an interview with realtor Clint Jordan on the latest NAR Settlement effects from a realtor’s perspective and ways he is working with loan originators to be more efficient together.)
Source: Mortgage News Daily

Stronger Start Thanks to Weaker Jobs Report

Today’s playbook was fairly straightforward with bonds being likely to move in the direction suggested by the jobs report.  The only challenge would have been the presence of mixed messages (i.e. a big beat in the job count paired with a big miss in the unemployment rate).  While there was indeed a beat in the job count, it wasn’t big.  It was also offset by much larger negative revisions.  Unemployment ticked slightly higher.  Wages hit their forecast of 0.3 vs 0.4 previously.  All told, it suggests more of normalizing labor market with a hint of softening as opposed to a surprisingly resilient labor market indicated by last month’s jobs report.  Bonds like it and have now erased all of the losses seen since last week’s presidential debate.

As a reminder, while there was a lot of attention on the presidential debate as scapegoat for last Friday’s bond sell-off, we were bigger fans of the month-end positioning explanation.
Source: Mortgage News Daily

Data Over Politics, For Now

Data Over Politics, For Now

Several days ago, we were debating whether the presidential debate or the month-end/new-month trading environment was the bigger market mover.  The political angle was more popular in the analytical community, but evidence is increasingly suggesting that popularity wasn’t necessarily warranted.  Today offered some compelling evidence in the form of absolutely no reaction to a widely circulated newswire that seemed to suggest Biden having second thoughts about remaining in the running.  Contrast that to the immediate and obvious reaction to the ISM Services data, which made for the highest Treasury trading volume since PPI and jobless claims data on June 13th.  Data will remain in focus when markets return from the holiday break on Friday morning thanks to non-farm payrolls.

Econ Data / Events

ADP Employment

150k vs 160k f’cast, 157k prev

Market Movement Recap

08:39 AM Flat overnight and stronger in early trading.  MBS up 1 tick (0.03).  10yr down 2.6bps at 4.406

01:40 PM Drifting sideways after strong reaction to weak ISM data.  MBS up about a quarter points and 10yr down 8bps at 4.352
Source: Mortgage News Daily

Mortgage Rates Move Lower After Weak Service Sector Report

“Data dependent” is one of the most common phrases heard from the Federal Reserve these days when it comes to rate-setting policy.  And while the Fed doesn’t directly dictate mortgage rates, the bond market tends to trade the same data that the Fed cares about. Today’s key report, the ISM Services index, isn’t quite at the top of the Fed’s list, but it’s a longstanding market mover when it comes to bonds and, thus, rates. Today’s installment was much weaker than expected.  Weak data correlates with lower rates, all other things being equal. Bonds improved immediately after the release.  This allowed mortgage lenders to set lower rates today.  Some lenders had already published their initial rates for the day and several of them ended up issuing positive reprices before the end of the day. The bond market is closed tomorrow for the holiday, but will be back to digest an even more important economic report on Friday morning: the big jobs report.
Source: Mortgage News Daily

Warehouse, Fee Collection, Broker AVM Tools; Violation Tracker; Lender and Investor Changes

Did you know that there were 2.5 million estimated people living in the newly independent nation of the United States in July 1776? Per the Census Bureau, that figure has now risen to around 335 million. 56 individuals of those 2.5 million people were signers of the Declaration of Independence, with John Hancock, a merchant by trade, being the first signer. Benjamin Franklin, who represented Pennsylvania, was the oldest signer at age 70; Edward Rutledge of South Carolina was the youngest signer at age 26. Speaking of numbers, if you like them, although the FHFA and the CFPB would like you to believe that they are part of the fabric of the United States, they aren’t. But the FHFA and the CFPB Release Updated Data from the National Survey of Mortgage Originations for Public Use. Hey, I only know what I read in the newspapers. But there is some interesting real-time information out there, and if you want to see who’s paying what in violations, here you go. (Today’s podcast is found here and this week’s is sponsored by Bundle, the attorney-prepared legal documents company that is dedicated to the real estate, mortgage, and title industries. Fuel your operations and execution of documents from deeds to subordinations to assignments, and everything you need for any order, in one bundled price; receive 20 percent off using the code “Chrisman” at checkout. Hear an interview with Atlas Real Estate’s Tony Julianelle on the recent single family rental market transformation and why individuals in the mortgage industry should care about property management.)
Source: Mortgage News Daily

Weaker Data, Stronger Bonds, Early Close

The bond market will close at 2pm instead of 5pm today as a part of the Independence Day holiday (fully closed tomorrow).  With only a few hours left, it’s off to as good of a start as we could ask for, at least in terms of the bond market.  The economy is another story.  ISM Services is today’s biggest data headline and it was much weaker than expected and much weaker than last time.  Especially notable was the big drop in business activity from 61.2 to 49.6, the first sub-50 reading since the initial lockdowns in 2020. This builds a case for broader economic shift though the timing odd in juxtaposition to last month’s reading which was the highest in more than year.  Bonds reacted decisively with the highest data-driven volume since the big jump in jobless claims and the big miss in PPI on Thursday, June 13th.
Source: Mortgage News Daily

Refinance Volume Proves Brighter than Last Year

Higher interest rates knocked mortgage application volume back last week. But, while purchase volume appears to lose ground year-over-year, refinancing activity is steadily improving compared to the same week in 2023. The Mortgage Bankers Association said its Market Composite Index, a measure of that application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier and rose 8.0 percent on an unadjusted basis. The Refinance Index was down 2.0 percent compared to the week ended June 20 and was 29.0 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 35.7 percent of total applications from 35.1 percent the previous week.   [refiappschart] The seasonally adjusted Purchase Index fell 3.0 percent from one week earlier. The unadjusted Purchase Index increased 7.0 percent compared with the previous week and was 12.0 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates moved higher last week, crossing the 7 percent mark, even as the latest inflation data has kept market expectations alive for a rate cut from the Fed later this year,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Purchase applications decreased the final full week of June, even as both new and existing inventories have increased over the past few months. Refinance activity also remains subdued – although there was a slight increase in applications for conventional refinance loans.”  
Source: Mortgage News Daily