PennyMac Financial Services reported $82.3 million net income, inclusive of a $44 million net reduction related to servicing fair value and hedge losses.

The lender and servicer, which continues to make investments ahead of a future high-demand cycle, has reported tumbling margins in the past year.

Credibly will bring its SMB loans and revenue-based financing products to Figure’s Democratized Prime platform, Figure said in a press release.

Federal Reserve Gov. Michael Barr said Tuesday that the U.S. energy sector is more insulated from shocks than Europe’s, particularly in natural gas prices. However, he warned that the war is pushing up gasoline prices, which could spill over into other parts of the economy.

Data Didn’t Hurt, But Bonds Underperformed The Oil Price Recovery

Today’s headline is somewhat misleading. It points out the fact that oil prices made it back to yesterday’s lows whereas bond yields didn’t even come close. This is all true, assuming we’re looking at front month oil prices. But if we use a longer-term futures contract for oil, the correlation with bonds was actually closer to 1:1. Either way, the bond rally only unwound a fraction of yesterday’s losses and that’s especially true for MBS (5.0 coupons lost half a point yesterday, but regained less than a quarter point today). Econ data didn’t hurt, but it didn’t exactly help either. ISM and Job Openings were both very close to consensus.

Econ Data / Events

Trade Gap (Mar)

-60.30B vs $-60.9B f’cast, $-57.3B prev

S&P Global Services PMI (Apr)

51.0 vs 51.3 f’cast, 49.8 prev

ISM Biz Activity (Apr)

55.9 vs — f’cast, 53.9 prev

ISM N-Mfg PMI (Apr)

53.6 vs 53.7 f’cast, 54.0 prev

ISM Services Employment (Apr)

48.0 vs — f’cast, 45.2 prev

ISM Services New Orders (Apr)

53.5 vs — f’cast, 60.6 prev

ISM Services Prices (Apr)

70.7 vs — f’cast, 70.7 prev

New Home Sales (Mar)

682K vs 0.65M f’cast, 587K prev

USA JOLTS Job Openings (Mar)

6.866M vs 6.84M f’cast, 6.882M prev

Market Movement Recap

09:04 AM Modestly stronger overnight with bonds following oil prices. 10yr down 1.5bps at 4.422 and MBS up an eighth.

10:08 AM Slightly stronger after 10am data. MBS up 5 ticks (.16) and 10yr down 2.7bps at 4.41

12:14 PM best levels of the day. 10yr down 3.2bps at 4.406 and MBS up a quarter point.

02:42 PM Off best levels. MBS up 5 ticks (.16) and 10yr down 2bps at 4.419

One popular refrain in the mortgage industry is that rates take the escalator on the way up and the stairs on the way down. Yesterday was definitely an “escalator” sort of day with the average lender moving up 0.12% for a top-tier 30yr fixed rate. Based on improvement in the bond market, rates are lower today, but just barely. It’s not so much that rates are taking the stairs down, but more like they’re a small child, waiting at the top of the staircase–afraid to take that first step. Some lenders are not even lower compared to yesterday’s levels. Others are only modestly better. The absence of better improvement is at least partly attributable to the slower movement in the underlying bond market. Specifically, today’s bond rally (good for rates) is less than one third the size of yesterday’s sell-off (bad for rates).

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After hitting the highest yields in more than a month yesterday, bonds have managed to pick up a few bps. The bulk of the recovery was already in place by yesterday’s close, but yields dropped another 2bps after war-related headlines just after 8am (US general said Iran’s attacks yesterday were below the threshold for war). Oil prices and bond yields continue the same old correlation. 

Coming up at 10am ET, we’ll get 2 economic reports that have historically been capable market movers: Job Openings and ISM Services. We’ve seen some evidence that the market is still willing to react to data if it’s far enough from expectations, but that risk is a bit asymmetric at present. Reason being: investors are waiting for economic weakness to show up due to high fuel prices. So it doesn’t take as much of an upside surprise in the data to cause bond market weakness. Conversely, if data is slightly weaker than expected, that would be less of a surprise to most investors and thus not as much of a benefit to bonds.

The promotion offers rate cuts as much as 25 basis points on new-home purchases as well as rate-and-term and cash-out refinance loans from May 4 through May 17.

“In looking at eight currently available proprietary RM products, there is a distinct relationship between HECM growth rates and proprietary product availability,” Reverse Market Insight said.