Observers said the Supreme Court likely will allow Federal Reserve Gov. Lisa Cook to remain at her post while she challenges her purported removal by President Donald Trump. But her continued presence would slow, rather than stop, the president’s quest for a voting majority on the central bank board.

Tri-merge mandates prop up a credit bureau/FICO oligopoly, raising mortgage costs with little benefit despite risk concerns, the chairman of Whalen Global Advisors argues.

Pfotenhauer held many positions in the mortgage and title industries in his long career, including being the chair of Merscorp, MORPAC and MISMO.

The 30-year fixed rate mortgage increased 3 basis points this past week, off of a three-year low point, but are nearly a percentage point lower than a year ago.

Mortgage borrowers filed a third amended class action complaint against the bank over modification issues from 2010 to 2015.

Bonds Erase Most of The Overnight Weakness

Thursday could be viewed two ways. On one hand, bonds lost ground early and were unable to recover it by the 3pm close. On the other hand, there was a decent rally on Wednesday that set a high bar for additional gains.  In other words, it’s a victory to merely hold close to yesterday’s closing levels. Data passed without a trace, either because it was stale, near consensus, or both. There was better buying in the afternoon–a fact that’s consistent with our observation that the EU session had an impact today.  The afternoon bond market recovery commenced when EU markets closed. Correlation, yes, but not necessarily causality. 

Econ Data / Events

Continued Claims (Jan)/10

1,849K vs — f’cast, 1884K prev

Core PCE Prices QoQQ3

2.90% vs 2.9% f’cast, 2.6% prev

Corporate profitsQ3

4.7% vs 4.4% f’cast, 0.2% prev

GDPQ3

4.4% vs 4.3% f’cast, 3.8% prev

GDP Final SalesQ3

4.5% vs 4.6% f’cast, 7.5% prev

Jobless Claims (Jan)/17

200K vs 212K f’cast, 198K prev

PCE Prices (Q/Q)Q3

2.8% vs 2.8% f’cast, 2.1% prev

Core PCE (m/m) (Nov)

0.2% vs 0.2% f’cast, 0.2% prev

Core PCE (y/y) (Nov)

2.8% vs 2.8% f’cast, 2.7% prev

PCE (y/y) (Nov)

2.8% vs 2.8% f’cast, 2.7% prev

PCE prices (m/m) (Nov)

0.2% vs 0.2% f’cast, 0.2% prev

Market Movement Recap

08:34 AM Modestly weaker overnight and no reaction to AM data so far. MBS down an eighth and 10yr up 1.7bps at 4.258

10:30 AM No major reaction to PCE data. MBS still down an eighth and 10yr up 2bps at 4.261

12:37 PM Bouncing back a bit. MBS down only 2 ticks (.06) and 10yr up only 1.3bps at 4.254

03:22 PM MBS down 3 ticks (.09) and 10yr up 0.8bps at 4.249

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Mortgage rates may not be as low as they were before the weekend’s geopolitical headlines, but they’ve moved just a hair lower on each of the past two days. Specifically, our daily rate index is down to 6.19% after starting the week at 6.21% on Tuesday (up from 6.07% last Friday). While there was a large glut of seemingly important economic data today, it didn’t have a noticeable impact on the bond market. Part of the reason is that the data in question is very stale at this point.  The most recent monthly data covered November and the GDP release was for Q3 (July-Sep). Timeliness aside, the data was also very close to forecasts. There’s even less on the calendar tomorrow, but markets remain susceptible to geopolitical risk and any headlines that speak to the fiscal outlook (tariffs, spending, etc). 

Bonds found a bid along with stocks yesterday afternoon after Trump announced a “framework of a deal” on Greenland.  Markets were much less interested in U.S. access and more concerned with pausing the more immediate market-related implications (new tariffs and changes in foreign demand for Treasuries). This notion was reinforced this morning as there was no reaction at all to new comments saying the U.S. would have “total access” to Greenland with “no time limit.” 
The early round of econ data also failed to inspire, although that’s no surprise given the stale nature of GDP and generally limited impact of weekly jobless claims (in addition to the fact that jobless claims are sticking to the same script seen in the past 2 years).

All that remains is the PCE inflation data at 10am ET, but it should be noted this is for the months of Oct/Nov and that we’ve already received CPI/PPI inflation reports for December.  Data aside, yields have been trending gradually higher in concert with European markets, but Treasuries still retain a majority of yesterday’s gains.

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