MBS buying’s future and what Bill Pulte’s new additional role portends are among issues coming into focus, panelists and attendees at an IMN conference said.

In addition expanding the types of loans eligible for the reverse product, the policy creates a flexible borrower counseling timeline to facilitate lending.

Treasury Secretary Scott Bessent downplayed senators’ concerns about higher costs for Americans, noting average yearly inflation is lower than during the pandemic, while also confirming acting Attorney General Todd Blanche’s Tuesday claim that the administration will not move forward with a $1.8 billion “anti-weaponization fund.”

The Federal Reserve’s former top regulator said recent efforts to reform regulation and supervision have boosted executive compensation and share buybacks, not the broader economy.

Those who looked to sell their properties during May listed at a price 2.4% lower, as they take into account current conditions instead of being overoptimistic.

Imagine being stuck at home watching TV for 3 months and only being able to stream one show. That’s been the case for the bond market (which dictates interest rates) since the beginning of March. The show in question involves watching war-related headlines and reacting in roughly the same manner as oil prices. Today’s episode was more interesting than yesterday’s. Key details included reports of Iranian missile strikes on various U.S. and allied targets. In general, rates have improved on news that increases the odds of a peace deal. Unsurprisingly, today’s headlines (technically, yesterday night, but reflected in today’s rate movement) did the opposite. Thanks to headline fatigue and desensitization, the rate market has been responding with less volatility over the past few weeks. As such, today’s increase was fairly modest in the big picture but nonetheless leaves rates near their highest levels in more than 9 months. [thirtyyearmortgagerates]

Minimal Change After Overnight Volatility

War headlines struck back in the overnight session. Specifically, Iran struck back against various U.S. and allied sites, allegedly in response to U.S. strikes on Iranian sites. Peace prospects take an obvious hit in response to these escalations and financial markets remain willing to react accordingly. Oil prices were already moving up to the highest levels in more than a week in the overnight session and that momentum peaked at 6am ET. Treasury yields followed and then stayed broadly sideways for the duration of the domestic session. In the bigger picture, 10s are well within the 4.43-4.51 range that dominated last week. War headline sensitivity continues accounting for 90% of forward-looking volatility risk while econ data rounds out the rest. 

Econ Data / Events

ADP jobs (May)

122K vs 117K f’cast, 109K prev

ISM N-Mfg PMI (May)

54.5 vs 53.8 f’cast, 53.6 prev

ISM Services Employment (May)

47.9 vs — f’cast, 48.0 prev

ISM Services New Orders (May)

57.3 vs — f’cast, 53.5 prev

ISM Services Prices (May)

71.3 vs — f’cast, 70.7 prev

Market Movement Recap

08:17 AM Moderately weaker overnight on renewed Iran war hostilities.  Not much reaction to ADP data. 10yr up 3.7bps at 4.49 and MBS down a quarter point

10:17 AM modest improvement after ISM data, but only in Treasuries. 10yr up 2.3bps at 4.476 and MBS still down a quarter point

11:45 AM weakest levels with MBS down 10 ticks (.31) and 10yr up 4.5bps at 4.498

02:37 PM Sideways at weaker levels. MBS down 9 ticks (.28) and 10yr up 3.6bps at 4.489

Iran launched missiles at several U.S. allies yesterday afternoon and oil prices responded accordingly with a move back up to May 22nd levels. Treasury yields followed, but have generally been staying lower than the oil price correlation would suggest. 10yr yields continue holding a narrow range between 4.43 and 4.52. They’re roughly 3.5bps higher to start the day at 4.485 and MBS are down a quarter point. ADP employment came out almost right on the screws and garnered no notable bond market response. At 10am ET, we’ll get ISM Services, which is one of this week’s few reports that might have enough of an impact to influence intraday bond market volatility that is otherwise taking most of its cues from the war.

The latest and greatest with FHFA Director Bill Pulte (happy 38th birthday last week!) is that President Trump tapped him (more below), to be the acting director of national intelligence. At this point he is still running Freddie Mac and Fannie Mae. The President cited Pulte’s work at the FHFA and his role as chair of Fannie & Freddie, saying Pulte “has deep experience managing the most sensitive matters in America, the safety and soundness of the Markets, and over 10 trillion dollars at Fannie Mae/Freddie Mac, a substantial increase from where it was just 12 months ago.” For now, our industry and consumers wait on F&F to make a firm decision and move forward with “credit modernization” (aka credit score wars). VantageScore, FICO Direct, tri-merge, and single score models all have their proponents and opponents. Meanwhile, the number of lenders charging borrowers up-front for credit costs continues to limp along, meaning that the company eats the costs for loans that don’t actually fund. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Experian and the Experian Verify Hub. The platform brings manual submissions in-house and consolidates post-submission activities into a single environment, aiming to provide more streamlined access, faster insights, and a more cohesive user experience. Today’s has an interview with Experian’s Sophia Cheung on simplifying and modernizing the verification process by consolidating multiple systems into a single platform, further streamlining workflows, and increasing value)

Analysts said Bill Pulte’s new additional role as spy chief will further delay GSE privatization efforts, although that could change if he formally departed.