The deal brings the largest housing legislation in a generation one step closer to becoming law – and handing both parties and President Donald Trump a messaging win on affordability five months before a midterm election expected to center on cost-of-living concerns.

Newly minted Federal Reserve Chair Kevin Warsh will host his inaugural press conference on Wednesday. Bankers will be paying close attention to what he says — and how he says it.

The Federal Housing Finance Agency’s annual report to Congress asks for enforcement and referral powers beyond the limited ones it currently has.

The deal reinforces PennyMac’s AI-focused pivot and will also accelerate development and growth of its proprietary servicing platform, the lender said.

Rithm and UWM Holdings are the favorite names among publicly traded lenders, while BTIG adds coverage of Better Home & Finance at a buy rating.

Decent Gains, But Some Signs of Resistance

Bonds improved overnight at the start of European trading and made additional gains in concert with lower oil prices during the domestic session. Notably, the gains met resistance at 4.42%–a resistance level that’s been on our radar since the last bounce a few weeks ago. Technical levels certainly don’t predict the future, but they can provide a framework for measuring the pace of change in trading levels. If bonds are weaker in the morning, it would act as confirmation that the initial response to the Iran peace deal has played out. In addition, there’s potential volatility surrounding the Fed announcement, almost exclusively reserved for feeling out any visible shifts from new Fed Chair Kevin Warsh.

Econ Data / Events

ADP Employment Change Weekly

25.5K vs — f’cast, 29K prev

Building Permits (May)

1.413M vs 1.42M f’cast, 1.423M prev

Housing starts number mm (May)

1.177M vs 1.43M f’cast, 1.465M prev

Import prices mm (May)

1.9% vs 1.0% f’cast, 1.9% prev

Market Movement Recap

08:52 AM Stronger overnight as Europe trades the peace deal. MBS up 6 ticks (.19) and 10yr down 4bps at 4.438

11:55 AM Best levels. MBS up 6 ticks (.19) and 10yr down 5bps at 4.428

03:03 PM MBS up 10 ticks (.31) and 10yr down 5.3bps at 4.425

Today’s top tier 30yr fixed rate was 6.54% for the average lender. You’d have to go back to May 14th’s reading of 6.52% to see anything lower. The latest improvement follows another moderate drop in oil prices and bond yields as global markets digest the U.S./Iran peace deal. There’s still some risk that the deal doesn’t happen as is currently expected. If those risks materialize, rates could nudge back up toward recent highs. But if everything goes according to plan (or close to it), the bond market may continue pricing in the expected impact on oil prices. The only warning is that some analysts think oil prices have already gotten ahead of themselves in that regard. If those analysts are right, it could limit any additional momentum toward lower rates until peace is on more solid footing. Tomorrow brings the next Fed rate announcement. Markets foresee zero chance of a hike or a cut, but will nonetheless be paying attention to new Fed Chair Warsh’s first press conference. 

European markets definitely got in on the peace deal action yesterday, but they didn’t trade it nearly as aggressively as US markets.  Why bring this up? There was a fairly obvious shift toward lower oil prices and bond yields overnight, and the most obvious suspect was simply the opening bell for European markets. While obvious, it wasn’t too big. 10yr yields are hovering in a range that’s 2-3bps lower than yesterday, and still above the lows seen at the beginning of the month. 

Sure, we have a Fed meeting, but the Fed doesn’t set mortgage rates. Will they all head off on vacation after this week? Perhaps. Given the increase in the “out of office” replies I am seeing, and children in airports, summer vacation is in full swing. (Apparently families will change their spending habits to accommodate the run up in fuel costs; my local gas station won’t let me go above $100 per visit on my credit card.) In an extreme example to time management, the U.S. Congress has only 16 legislative days left on its agenda until the election; the rest of the time is vacation and campaigning to keep their jobs. In other words, don’t look for much from Congress until January. Certainly, no politician wants to cut spending despite the deficit continuing to escalate. What would you tell your kids if their incomes weren’t doing much but they were ramping up their spending? (Today’s podcast can be found here and this week’s ‘casts are sponsored by Truework, the one verification solution to replace in-house waterfalls. Verify any borrower with a VOIE solution that automates the entire process to quickly deliver the most accurate and complete reports with broad GSE coverage. Interview with TrustEngine’s Dave Savage on why the mortgage professionals who will thrive are those who obsess over delivering a modern, technology-enabled consumer experience, embrace AI to scale advice and efficiency, and focus on educating and advocating.) Broker and Lender Products, Software, and Services

HUD said its Office of Fair Housing and Equal Opportunity has reduced a Biden administration case backlog by 27% and accelerated investigations.