We’re now into the 3rd day of a week that’s conspicuously lacking in relevant econ data. In addition, the looming holiday weekend hinders participation and increases potential volatility. That means an extra level of impact for whatever bonds can find to move the needle. So far, all they’ve been finding is a feeling of disillusionment with the fiscal outlook as they watch congress debate spending more money on one thing vs spending more money on another thing.  Insultingly, those things are in the spotlight more for political strategy reasons than for their central role in our current fiscal spiral. So not only are we not addressing the spiral with any of the available options, we’re also highlighting the worst features of our legislative process.
While all of the above has bonds under pressure overnight, it’s worth noting that yields continue to operate in the same short-term range since the beginning of last week. That range was entered due to the US/China tariff pause.  Fiscal disillusionment is merely the factor pushing yields toward the top of that range.

In remarks at a Mortgage Bankers Association conference, the trade group’s CEO also acknowledged the need for some guardrails to remain in place.

The size of typical bulk MSR deals trading has shrunk, according to panelists at the Mortgage Bankers Association’s Secondary and Capital Markets Conference.

An explicit guarantee for Fannie Mae and Freddie Mac could cause the risk weighting of agency MBS to decline, in turn freeing up banks’ balance sheets.

Starting with the client for life concept, executives from Rocket and CMG Financial described what is happening at their nonbanks to achieve future success.

Discrepancies between servicer and investor systems have been rare recently but the dollar amounts involved magnify the impact, according to PMSI’s CEO.

Ultimately Sort of Flat if You Use Your Imagination

Here’s a quick and easy method for imagining that bonds were flat today. Step one, go back to yesterday and use 3pm as a closing time (not a crazy request considering that’s the traditional end-of-day marking time for Treasuries). Then do the same for today. The result is that 10yr yields are up about half a bp. Feel free to round that down to 0bps, and voila! Flat day.  That assessment actually fits better with the calendar and the general vibe. AM volatility came and went surrounding budget headlines and bonds are once again flirting with 4.5% 10yr yields on a holiday-shortened, mostly data-free week, waiting for the next shoe to drop.

Market Movement Recap

10:47 AM Modestly weaker overnight with additional selling in the first 2 hours.  MBS down 5 ticks (.16) and 10yr up 4.2bps at 4.492

01:53 PM Decent recovery with MBS down only 3 ticks (.09) and 10yr up 2.7bps at 4.478

04:47 PM Heading out in moderately weaker territory, but in line with y’day’s mid day levels. MBS down 6 ticks (.16) and 10yr up 3.3bs at 4.483

The Federal Housing Finance Agency chief also explained an alternate name he’s used for the agency in his first speech at a Mortgage Bankers Association event.

Leaders of the government mortgage programs suggest they’re back to business as usual following the Trump administration’s initial disruption.

Rocket Companies and Redfin argue in court filings that a lawsuit seeking to delay their merger is motivated by the plaintiff’s personal gain, not concern for investors.