Recently I paid over $10 for a simple Oscar Mayer 12-ounce package of bacon. Jerome Powell, help me! Well, the U.S. Federal Reserve doesn’t set bacon prices, or things that come from China like rare earth metals, most of which I’ve never heard of but are apparently in my phone and car’s dashboard. Geopolitical tensions and export restrictions in China sending the prices of crucial metal components in electronics way up. The price of dysprosium is up to $910 per kilogram, triple the pre-export restrictions price. The price of terbium hit $3,700 per kilogram, quadruple the previous rate. The benchmark price for gallium has reached $1,325 per kilogram, which is 2.3 times the price at the beginning of the year and the highest price on record. China produces 99 percent of the world’s gallium. Our Federal Reserve can only do so much when it comes to combatting inflation. (Today’s podcast can be found here and this week’s are sponsored by Two Dots, whose conversational screening agent replaces manual underwriting with a streamlined, end-to-end process that reduces risk and fraud while securing safer borrowers, increasing profitable loan volume, and lowering underwriting overhead. Today’s has an interview with Creative Title’s Caleb Christopher on how lenders can adopt advanced AI and creative financing models while maintaining transparency, security, and consumer protection, and examining how private-capital “non-bank bank” structures, tightening credit, and the needs of underserved borrowers will shape the balance between innovation, risk, and trust.)

If there’s one resounding theme in the bond market this week, it’s that trading momentum marched to its own beat with almost zero regard for the available economic data. While this was a notable disconnect on Wednesday (little reaction to ADP/ISM), it’s fairly easy to reconcile on a day like today where the PCE data is super stale (delayed release from September) and the only other report, Consumer Sentiment, rarely has an impact. 

In general, the past 5 days have marked a casual return to the prevailing range (or more appropriately, the prevailing trend channel), thus setting the stage for a bigger break after the bigger events on the horizon (Fed day next week and jobs report the week after).

Delinquency trends split in Q3, with securitized and agency loans showing more strain while banks and life companies saw small improvements amid uneven vacancy and rent conditions.

The Government Accountability Office has agreed to investigate Federal Housing Finance Agency Director Bill Pulte for allegations of misuse of power and violations of federal privacy laws

The drop in mortgage rates as measured by Freddie Mac, came about even as the 10-year Treasury yield used to price loans moved higher since Thanksgiving.

Of the 50 highest risk markets in the country, 16 reside in California, followed by New Jersey with nine, Attom found.

Gallego introduced legislation to amend the EB-5 immigrant investor visa program in order to funnel more money into the construction and rehabilitation of homes.

Bond Momentum Continues Ignoring Data

On multiple recent occasions, we’ve seen bonds make a moderate move on days with important economic reports, but not in response to those economic reports. Thursday was the latest example. The 8:30am jobless claims data was undoubtedly a tradeable event based on the big volume spike at the time, but the higher yields were already in place by the time the data came out. Moreover, there wasn’t much of a response afterward. Bonds spent the rest of the day drifting sideways to slightly weaker, but still very much in the prevailing pre-Thanksgiving range (i.e. 10yr yields 4.05-4.17).

Econ Data / Events

Challenger layoffs (Nov)

71.321K vs — f’cast, 153.074K prev

Continued Claims (Nov)/22

1,939K vs 1960K f’cast, 1960K prev

Jobless Claims (Nov)/29

191K vs 220K f’cast, 216K prev

Market Movement Recap

08:53 AM moderately weaker overnight with additional temporary selling after jobless claims data. MBS down 3 ticks (.09) and 10yr up 3bps at 4.093

01:59 PM 10yr yields are up 4bps at 4.104. MBS down 5 ticks (.16). 

03:02 PM MBS are now down 6 ticks (.19) and 10yr up 4.7bps at 4.11

A North Carolina homeowner says the large servicer’s $6.75 fee for borrowers to make mortgage payments with a debit card violates a state debt collection law.

Treasury Secretary Scott Bessent said the Federal Reserve Board should reject the renomination of any regional Federal Reserve Bank presidents who have not lived in their districts for three years, signaling a potential confrontation when reappointments come before the board in February.