Tiffany To, CEO and co-founder of Ontollo, is bringing her background in enterprise artificial intelligence to the board of PennyMac Financial Services.

The nonbank mortgage giant, which acquired Mr. Cooper and Redfin last year, will use two longer-term borrowings to repay obligations more immediately due.

The deal will bring Kiavi’s assets onto Figure’s blockchain environment, adding $7 billion in annual volume, and more than $100 million of monthly cash flow onto its blockchain-native warehouse marketplace, Democratized Prime.

Over three-quarters of the Wolters Kluwer Blue Chip Economic Indicators panel said the FOMC will ease eventually, but a growing number are now expecting a hike.

Regulators will award a total of $3 million to over 1,800 households after a judge penalized Home Matters USA over its mortgage relief fraud scheme.

“Rob, everyone knows that the GSEs (Freddie Mac and Fannie Mae) don’t use credit scores for loan approval. They use it for pricing. The GSEs have created their own scoring system and it’s just the investors that utilize the score.” True dat. It takes a while to test the impact of credit scores on defaults, delinquencies, pricing, and prepayment speeds, and staff in our biz interested in any Agency pilot programs about credit are encouraged to reach out to their F or F representatives. People seem to like lists and rankings. ATTOM released its ResiScore, an AI-powered neighborhood intelligence offering that ranks residential areas based on projected housing market performance. If you have a client in the market to buy a home, you certainly welcome lower prices and lower rates (although if they’re also selling a home, you want to get the best possible price on that). But higher prices impact affordability much more than rates. Realtor.com estimates that one of two things would need to happen for monthly mortgage payments to fall back to 2019 levels: Household incomes would need to rise 56 percent, or mortgage rates would need to fall to 2.65 percent. In other words, it’s not happening anytime soon. (Today’s podcast can be found here and this week’s ‘casts are sponsored by JazzX, the first true end-to-end AI platform built for mortgage. From application to underwriting, JazzX is a new operating model that helps you scale growth, boost productivity, and transform how your team performs. Hear an interview with Automax.ai’s Humza Ahmed on how residential property appraisal technology is evolving, the way it’s built for UAD 3.6, and what is dramatically reducing turnaround time.)

There’s been remarkably little change in mortgage rates so far this week. Monday saw a modest increase vs Friday, but since then, there’s been essentially no change. Today’s rates were technically 0.01% lower than yesterday’s, but many lenders were perfectly unchanged. This is an acceptable result given the presence of high stakes economic data and ongoing war related headlines. The data in question was the Consumer Price Index (CPI), an inflation report that occasionally causes significant volatility for rates. Today’s CPI (for the month of May) came in right in line with expectations, and slightly lower than expected when excluding food and energy prices. It seems to bear repeating that when CPI comes in lower than expected or lower versus the previous month, this rarely means that prices are falling. Rather, prices simply didn’t go up quite as much as last month, but they’re still rising at an unacceptably quick pace. Fortunately, rates get in position for forecasted results. Thus, the data merely needs to align with forecasts to avoid causing volatility.

War Headlines Cause Mid-Day Reversal

Bonds started the day inconsequentially weaker and picked up some gains after CPI came in a hair lower than expected at the core level. Just before noon, yields began rising and ultimately hit the 3pm close up a few bps versus yesterday. MBS were down about an eighth of a point, but it wasn’t enough for the average lender to bother with a reprice. A forensic audit of the afternoon weakness leaves only one explanation: war headlines. Specifically, Trump said the U.S. would be “attacking hard again today.” The market may increasingly take these headlines with a grain of salt, but it doesn’t ignore them. Both oil prices and bond yields moved higher after that and there were no notable alternative explanations for the 10yr weakness although the aftermath of the 10yr Treasury auction may have caused some supply/demand imbalances that contributed.

Econ Data / Events

m/m CORE CPI (May)

0.2% vs 0.3% f’cast, 0.4% prev

m/m Headline CPI (May)

0.5% vs 0.5% f’cast, 0.6% prev

y/y CORE CPI (May)

2.9% vs 2.9% f’cast, 2.8% prev

y/y Headline CPI (May)

4.2% vs 4.2% f’cast, 3.8% prev

Market Movement Recap

08:41 AM Slightly stronger after CPI. MBS up 1 tick (.03) and 10yr up 0.6bps at 4.526 (down from 4.538 before the data).

11:34 AM little changed from earlier levels. MBS up 1 tick (.03) and 10yr roughly unchanged at 4.519

11:55 AM Some volatility after Trump comments on attacking Iran. MBS down 1 tick (.03) and 10yr up 1bp at 4.529

02:55 PM Bouncing back from weakest levels. MBS now down 3 ticks (.09) vs 6 ticks (.19) earlier.  10yr now up 2.3bps at 4.541 vs intraday highs of 4.559

Most understand this, but some forget: CPI numbers on econ calendars are not prices. They’re the change in prices. We bring that up in case anyone thinks today’s core monthly CPI of 0.2 means that prices are lower than last month when the core was 0.4. While it’s a decent monthly number and lower than the expected 0.3, it’s also 2.4% if repeated for 12 months (still above the 2.0% target). Plus, we often forget that the 2.0% inflation target is for headline CPI–not core–and that is running at 4.2% y/y presently. Thankfully, forecasters were right on target with headline expectations, so despite being a lot higher than anyone would like, the bond market is not surprised and thus holding at levels just slightly better than before the data.
If you see a chart of Owners’ Equivalent Rent (OER), remember that last month’s pop was driven by the October data being zeroed out due to the government shutdown combined with the fact that OER cohorts are only compared every 6 months. Thus April’s CPI (the pop in the chart below) involves an April vs October comparison to update the monthly data. Today’s data involves a May vs November comparison, and we had data for November.

Excluding food, energy, and shelter, CPI was up 0.273–a slower pace than last month.

Contract closings rose 3.2% to an annualized rate of 4.17 million last month, according to data released Tuesday by the National Association of Realtors.