Rate rolled out its Rate App entirely in Spanish Thursday as part of its Language Access Program.

CrossCountry Capital will partner with an Ares Alternative Credit fund and Hildene Capital Management after receiving $1 billion of equity capital commitments.

President Donald Trump asked the Supreme Court to reverse a lower court ruling allowing Federal Reserve Gov. Lisa Cook to remain in office pending the outcome of her lawsuit challenging Trump’s move to fire her late last month.

Will September Deja Vu Continue?

Rates rallied hard into last September 2024’s Fed rate cut and then bounced relentlessly higher.  With average rates up about a quarter point since Tuesday, the parallels are certainly there.  But Last year’s spike didn’t happen so abruptly on Fed day and the day after.  It required upbeat econ data to send rates screaming higher. In today’s case, we had two separate upbeat reports. This was barely worth an eighth of a point of weakness in MBS and not even 3bps of weakness in 10yr yields, but on average, lenders are feeling defensive (when MBS prices were at the same levels 2 weeks ago, rates were almost 10bps lower). The good news is this: the deja vu is both coincidental and driven by objective developments. It’s not on a pre-set course and it won’t continue if incoming economic data is weak. The bad news is that if the incoming data is surprisingly strong, well… you know.

Econ Data / Events

Continued Claims (Sep)/06

1,920K vs 1950K f’cast, 1939K prev

Jobless Claims (Sep)/13

231K vs 240K f’cast, 263K prev

Philly Fed Business Index (Sep)

23.2 vs 2.3 f’cast, -0.3 prev

Philly Fed Prices Paid (Sep)

46.80 vs — f’cast, 66.80 prev

Market Movement Recap

08:23 AM MBS up an eighth and 10yr down 1.6bps at 4.064

08:37 AM Slightly weaker after data.  MBS still up 1 tick (.03) and 10yr up 0.1bps at 4.081

09:39 AM Losses continue.  MBS down 6 ticks and 10yr up 4.9bps at 4.129

12:27 PM sideways after early losses.  MBS down 3 ticks (.09) and 10yr up 3bps at 4.111

03:17 PM MBS down just over an eighth and 10yr up 3.4bps at 4.115

It’s day two of mortgage rates surging higher–now back to the highest levels in 2 weeks (the day before the September 5th jobs report). The juxtaposition of yesterday’s Fed rate cut and the sudden mortgage rate spike is incredibly confusing to most of the population, so let’s clear it up. SHORT VERSION:  
The Fed Funds Rate (FFR) doesn’t dictate mortgage rates
The FFR only changes on Fed announcement days, 8 times a year.  It changes in response to various economic reports and events.
Mortgage rates change daily and the bonds that drive mortgage rates change in real-time throughout the day.  That means mortgage rates can drop for all the same reasons that drove yesterday’s rate cut.
Because those reasons were already in play well before yesterday, mortgage rates had already responded to them well before yesterday.
Bottom line: the Fed Funds Rate and mortgage rates dropped for the same reasons, but mortgage rates got to do it sooner because they move more nimbly. 
LONG VERSION:
We’ve written and re-written the long version too many times to count.  Here is one of the most evergreen examples: https://www.mortgagenewsdaily.com/markets/mortgage-rates-09212022
SPECIAL NOTE REGARDING OTHER NEWS STORIES SAYING RATES ARE LOWER: There are an unfortunate number of news articles out there today that claim mortgage rates are LOWER.  This is due to Freddie Mac’s weekly rate survey dropping to 6.26 from 6.35 last week. Freddie’s rate is an average of the 5 days ending yesterday, so 80% of the input is comprised of the lowest rates in a long time.  News organizations then quote the survey and give the impression that this week’s rates are lower than last week’s.

JPMorgan Chase, Citigroup, Wells Fargo and Bank of America, PNC Bank, N.A. and others announced a decrease in its prime lending rate to 7.25 percent, effective today, Sept. 18. As expected, the U.S. Federal Reserve cut the overnight Fed Funds rate by .250. Stephen Miran, who was sworn in just before the two-day policy meeting and is remaining a White House employee for the duration of his stint at the Fed (much to the concern of those wanting an independent Federal Reserve) was the lone dissent among Federal Open Market Committee (FOMC) participants, instead favoring a 50-basis-point reduction. Mr. Miran has echoed President Trump’s criticisms of the central bank and called for cheaper borrowing rates. “Rob, I heard a presenter saying that U.S. citizens are saving no money whatsoever. What are you hearing?” I would say that statement is misleading and sensationalist and generalized. Savings vary through different periods of our lives, and different classes save differently. The Fed has a nice graph showing that, aside from COVID when we were hoarding toilet paper and watching Tiger King five years ago, we’re around 5 percent, which is roughly where we’ve been historically. (Today’s podcast can be found here and this week’s are sponsored by CreditXpert. The all-new credit optimization platform that helps you close more loans. CreditXpert is committed to making homeownership more accessible and affordable for ALL. Today’s features an interview with Indecomm’s Rajan Nair on the risks of falling behind in innovation, whether AG(entic)I hype distracts from present issues, and the growing concern over technology power being concentrated in the hands of a few.)

This morning’s economic reports (jobless claims and Philly Fed) are not notoriously big market movers, but many analysts gave ample credit to Claims for driving last Thursday morning’s rally.  Now today, claims are right back in line with the same low levels from 2 weeks ago.  Continued Claims are also much lower than expected, including a friendly revision to last week’s number.  A much stronger Philly Fed result isn’t really helping, even if it’s probably not hurting as much as the jobless claims reversal. Bonds were slightly stronger before the data, but yields are beginning to lift off since then.

Surprisingly big reaction to this data in Fed Funds Futures (nearly as big as yesterday’s Fed announcement).

But not super huge in the bigger picture.

Same chart as above, with 10yr yields on a separate axis.

The Community Home Lenders of America and the Community Associations Institute want the FHA to insure loans on condos approved by Fannie Mae and Freddie Mac.

The Federal Open Market Committee’s decision to reduce interest rates for the first time in nine months lifted bank stocks Wednesday. The 25-basis-point reduction could lead to net interest income headwinds now, but loan growth later, analysts said.

Most lenders said they had already priced in the widely-anticipated decision to cut short-term rates for 30-year home loans but other products will benefit.