Since the first day of the meeting, the 10-year Treasury yield has increased 16 basis points, with mortgage rates rising as a result, various trackers showed.

Reasonably Resilient After AM Losses

In another straightforward trading session, bonds responded logically to a trio of upbeat economic reports in the morning slot.  None of the data was top tier in terms of relevance to bonds, but it was relevant enough to move the needle. Refreshingly though, 10yr yields treated 4.19% as a support level, which was the lowest possible pivot point after rising above 4.15%.  This doesn’t guarantee it will continue to hold, but it does suggest the bond market isn’t in a rush to sell off without justification. 

Econ Data / Events

Continued Claims (Sep)/13

1,926K vs 1930K f’cast, 1920K prev

Core CapEx (Aug)

0.6% vs -0.1% f’cast, 1.1% prev

Core PCE Prices QoQ FinalQ2

2.60% vs 2.5% f’cast, 3.5% prev

Durable goods (Aug)

2.9% vs -0.5% f’cast, -2.8% prev

GDPQ2

3.8% vs 3.3% f’cast, -0.5% prev

GDP deflatorQ2

2.1% vs 2% f’cast, 3.8% prev

GDP Final SalesQ2

7.5% vs 6.8% f’cast, -3.1% prev

Jobless Claims (Sep)/20

218K vs 235K f’cast, 231K prev

Market Movement Recap

08:41 AM Sideways to slightly weaker overnight with additional selling after data.  MBS down 6 ticks (.19) and 10yr up 3.7bps at 4.186

11:50 AM Near weaker levels.  MBS down 7 ticks (.22) and 10yr up 4.5bps at 4.194

01:08 PM No reaction to 7yr auction.  MBS down 5 ticks (.16) and 10yr up 2.9bps at 4.178

03:21 PM Still mostly sideways.  MBS down 5 ticks (.16) and 10yr up 2.1bps at 4.17

Thursday was the first day of the week with any meaningful economic reports. This is important to mortgage rates because economic data influences the bonds that determine day-to-day changes in rates.  In general, stronger data is bad for rates and today was no exception.   While today’s GDP data was for Q2 (and thus fairly stale), it was revised up from 3.3 to 3.8 which is a fairly big jump. In separate reports, the level of weekly jobless claims fell to much lower than expected levels and a report on big ticket manufactured goods showed much stronger demand than expected. All of these reports came out at 8:30am ET, which is roughly an hour before mortgage lenders begin setting rates for the day. This gives the bond market time to move to weaker levels resulting in mortgage lenders setting higher rates. Fortunately, the damage in the bond market was modest and the average lender didn’t drift too much higher versus yesterday’s latest levels. 

“I just won $10 in the lottery! The 7-11 clerk wanted to sell me a $10 lottery ticket in Atlanta. I said no.” Hopefully most people realize that a lottery is simply a tax on people who don’t know math (given the odds of winning). But the amount of equity that homeowners have, as a whole, is a sure thing… and staggering. U.S. homeowners now hold a record $17.8 trillion in equity, per ICE, including $11.6 trillion that’s “tappable.” That, versus the trillions in high interest credit card, auto, and student debt, certainly points to continued HELOC and 2nd mortgage offerings. That’s one trend, but there are others. The MBA’s Marina Walsh told us in the Loan Vision audience in Atlanta that the MBA expects a 1 percent home price average appreciation rate. As always, it is based on location and price point. Overall origination points at $1.7 trillion last year moving up to $2 trillion this year. Lenders, however, know that units are important, and those are expected to go from 4.572 million up to 5.598 million units. (Today’s podcast can be found here and this week’s podcasts are sponsored by BeSmartee, the most innovative mortgage technology platform for banks, credit unions, and non-bank mortgage lenders. Hear an interview with Guideline Buddy’s Marc Hernandez on AI-powered tools designed to bring instant clarity and confident decision-making to mortgage guidelines, helping industry professionals structure loans faster and more accurately, combining human-in-the-loop intelligence with plans for broader tech integration and white-label partnerships.)

It’s been a fairly straightforward morning so far with economic data coming out much stronger than expected.  While the reports in question are not in the “big ticket” category of market movers, they can add up in cases where they all send the same message. That’s exactly what happened this morning with jobless claims, durable goods, and GDP all coming out much stronger than expected. Bonds immediately pulled back, but not in an excessive way.  For now, the 4.19% technical level is providing support in 10s.

Mortgage applications increased 0.6% last week after jumping 29.7% the week prior, according to the Mortgage Bankers Association.

The latest reports from ICE Mortgage Technology and VantageScore appear to be in line with hints at growing borrower pressure officials are eyeing in policy.

The title industry sustained improvement first seen last year, with second-quarter premium totals up on both a quarterly and annual basis, ALTA said.

The lender is seeking to dismiss the lawsuit, calling the purported scheme to also deprive its loan officers of full compensation implausible.

The data suggest U.S. homebuilders are successfully luring buyers off the sidelines with aggressive sales incentives.