Frank Cassidy, who is currently principal deputy assistant secretary at the Department of Housing and Urban Development, will soon face a full Senate vote.

Federal Reserve Gov. Lisa Cook, citing several studies, outlined her concerns Thursday that generative AI could be used to manipulate markets, and regulators have not yet thought through how to police such activity.

Non-QM’s rapid rise is reshaping how lenders underwrite and manage risk, setting a model the rest of the industry will follow, writes the founder of Prudent AI.

The national median payment applied for by purchase applicants fell to $2,039 in October from September, the Mortgage Bankers Association said.

Even with this week’s increase, mortgage rates have remained within a 13 basis point band since mid-September, with industry pundits saying that’s where they will stay.

Yesterday, we discussed the fact that mortgage rates were heading into Thursday with a disadvantage (for most lenders, anyway). This had to do with the fact that lenders prefer to avoid changing rates in the middle of the day (unless bond market movement is big enough to force their hands) and the fact that bonds had weakened just enough for lenders to begin considering changing rates by the end of the day. In other words, lenders either had to increase rates yesterday afternoon or this morning, all other things being equal. The only thing that would have mitigated that necessity would have been a bond market rally of equal size to yesterday’s losses.  Fortunately, that’s exactly what we saw after this morning’s jobs report. The following chart shows movement in the actual bonds that control mortgage rates.  Bottom line: today’s rates were the same as yesterday’s because the red boxes were at similar levels.

Decent Gains Remain Intact; Stock Market Contribution is a Wild Card

The rescheduled release of the September jobs report played out exactly as we expected in terms of bond market impact. Volumes surged to the highest levels since the late October Fed announcement and bonds managed a clear response in spite of arguably mixed results. That said, the response was still logical given the Fed’s stated preference for the unemployment rate over the payroll count.  One could imagine an even more decisive rally if NFP was low or negative (or if the unemployment rate was another 0.1% higher). The AM rally may have fizzled out by 10:30am if not for another sizeable sell-off in stocks. This is a bit of a wild card going forward (i.e. we have to worry that a big correction in stocks could push yields higher).

Econ Data / Events

Non Farm Payrolls (Sep)

119K vs 50K f’cast, 22K prev

Participation Rate (Sep)

62.4% vs — f’cast, 62.3% prev

Philly Fed Business Index (Nov)

-1.7 vs -3.1 f’cast, -12.8 prev

Philly Fed Prices Paid (Nov)

56.10 vs — f’cast, 49.20 prev

Unemployment rate mm (Sep)

4.4% vs 4.3% f’cast, 4.3% prev

Market Movement Recap

08:34 AM MBS up 2 ticks (.06) and 10yr down 1.7bps at 4.121

11:50 AM Best levels of the day with MBS up 6 ticks (.19) and 10yr down 3.5bps at 4.103

03:10 PM MBS up 5 ticks (.16) and 10yr down 3.3bps at 4.105

It’s shaping up to be a “no whammies” sort of morning for the bond market.  There’s no denying that the jobs report was a highly tradeable event. The 30 minutes of volume following the release was by far the highest since the October 29th Fed announcement. But that volume has been fairly well balanced between buyers and sellers.  Credit the uptick to 4.4% in the unemployment rate for offsetting the job count coming in at 119k vs 50k f’cast.  The downward revision to August also isn’t hurting (-4k from +22k). Bonds are managing to hold at just slightly stronger levels so far.

“Here we are, a week away from Thanksgiving, and I’m in Kansas City. My family told me to stop telling Thanksgiving jokes, but I said I couldn’t quit cold turkey.” The CFPB isn’t going away “cold turkey” but yesterday’s personnel move was a reminder that there are clever people in Washington DC. It was a follow up to Trump Administration court filings last week that said the CFPB was on track to run out of money to operate at the beginning of next year and argued that it was legally prohibited from seeking an infusion of funding from the Federal Reserve, which is the bureau’s primary source of funding. Yesterday Donald Trump nominated Stuart Levenbach, a name you can forget as he is merely a placeholder, to be the permanent head of the CFPB. He’s a top aide to White House budget director Russ Vought. A CFPB spokesperson said the nomination was a “technical” maneuver intended to extend Vought’s ability to continue serving as the acting director of the agency without needing Senate confirmation, i.e., the move is designed to empower Vought to continue leading the agency as he moves to shut it down in the coming months. (Today’s podcast can be found here and this week’s are sponsored by Figure. Figure is shaking up the lending world with their five-day HELOC, offering borrower approvals in as little as five minutes and funding in five days. And, embedding their technology is easy. Hear an interview with Figure’s Michael Tannenbaum on how small-balance first-liens and HELOC-as-refi strategies work, the latest developments after the company’s IPO, and his thoughts on the current lending climate.)

Travis Hill’s nomination to lead the Federal Deposit Insurance Corp. was recommended favorably by the Senate Banking Committee to the full Senate Wednesday morning in a 13-11 party-line vote.