JPMorgan told FinTechs that it will charge for access to its customers’ bank information. The fees would bring big bucks to JPMorgan but eat into the profit margin of any lender or credit reporting agency or verification service. Will this become a trend with other depositories? Lenders and their originators, along with MBS investors, carefully watch trends in income and individuals. The gig economy, driven by on-demand work and services like rideshares and food delivery, is a growing part of the U.S. economy and primarily consists of sole proprietorships tracked by the U.S. Census Bureau’s Non-employer Statistics (NES) program. In 2023, the top five gig-related industries by number of individual proprietors were Couriers and Messengers, Taxi and Limousine Services, Janitorial Services, Independent Artists/Writers/Performers, and Child Care Services, all showing notable growth from 2018 figures. While not all non-employer businesses are part of the gig economy, these industries highlight the increasing prevalence and economic significance of gig-based work. Back to JPMorgan, some lenders are doing well, at least in the big bank world. JPMorgan reported that mortgage origination volume increased 26 percent YOY to $13.5 billion. Despite the jump in volume, production income actually fell, from $157 million to $151 million, but this was offset by an increase in servicing income. Wells Fargo clocked in at $7.4 billion in the quarter versus $5.3 billion for the second quarter last year. (Today’s podcast can be found here and this week’s are sponsored by Ocrolus. Ocrolus is transforming the mortgage industry with AI-powered data and analytics, featuring cutting-edge tools for automated indexing, income analysis, and discrepancy insights that empower underwriters to make timely, confident lending decisions. Hear an interview with Curinos’ Ken Flaherty and Rich Martin on key opportunities for lenders to attract, retain, and grow more profitable customer relationships, across both first mortgages and home equity products.)

Tuesday’s CPI reaction was frustrating. Bonds rallied for an hour only to sell off for the rest of the day starting at 9:30am.  Things are off to a different sort of start today. PPI was a bit lower than expected and didn’t immediately suggest a major tariff impact in the same way as some of the categories in yesterday’s CPI. Imports themselves are not included in PPI, but if a domestic producer raises prices on something with tariffed components, tariffs would effectively be responsible for the increase unless the producer had a separate reason to raise prices. Bottom line: it was easy to see tariffs spilling over to several CPI categories yesterday, thus the reversal, but the worst offenders in today’s PPI are distinctly domestic.  This likely the reason we haven’t seen a similar reversal of the initial headline reaction (which was a modest rally).

Government officials confirmed the California Democrat is under scrutiny over a long-held Maryland property he designated as a second home in 2020.

Credit availability declined in June as the job market and rising delinquency figures have some lenders concerned, the leading mortgage trade group said.

The Ocean State is the latest to enact rules prohibiting the agreements that end up tying older homeowners to long-term contracts with real estate brokers.

CEO Robin Vince refused to comment on “rumors or speculation” about a potential merger between the custody banking giant and its smaller rival, Northern Trust. He also said that the bar for BNY to engage in M&A is “very high.”

House Financial Services Committee Chairman French Hill promised to begin combing through Dodd-Frank to find areas for deregulation, while the panel’s ranking member made it clear that Democrats would fight for the Consumer Financial Protection Bureau.

What’s Up With The Paradoxical CPI Reaction?

Heading into today’s data, we knew there was a possibility of two separate reactions–one for the top line CPI numbers and one for a deeper look at the internal components. Those internals show that tariffs are having an impact even though it was a smaller impact than many forecasters were expecting. Bonds didn’t seem to care at first. When a new glut of trades came online at the 9:30am NYSE open, that changed.  Both stocks and bonds sold off sharply starting at 9:30am and this move looks far more convincing that the initial rally.

Econ Data / Events

Core MM CPI

0.228 vs 0.3 f’cast, 0.1 prev

Core YY CPI

2.9 vs 3.0 f’cast, 2.8 prev

Headline MM CPI

0.3 vs 0.3 f’cast, 0.1 prev

Market Movement Recap

08:36 AM after CPI 10yr yields are down 2.9bps at 4.406 and MBS are up an eighth

09:45 AM 10yr unchanged 4.434. MBS also unchanged and down just over an eighth from the highs. 

11:29 AM weakness continues.  MBS down 6 ticks (.19) and 10yr up 4.7 bps at 4.482

02:32 PM Steady, slight selling continues.  MBS down 7 ticks (.22) and 10yr up 5.3bps at 4.488

Mortgage rates are based on bonds and bonds don’t like inflation.  When inflation reports are higher than the market expected, rates tend to rise, all other things being equal.   But today’s inflation numbers were a bit lower than the median forecast. This scenario is typically more likely to push rates lower.  Indeed, in the first hour following today’s Consumer Price Index (CPI) release, bond trading implied lower rates.  Then things changed.   Recall our closing reminder from yesterday which qualified the conventional wisdom reactions, saying “even then, traders will look into the underlying composition of the number and assess whether changes were driven by tariff-dependent categories. For example, if CPI comes in at 0.2, but it was due to a big shift in rental costs or health care, rates could still rise if tariff-dependent categories showed higher inflation.” This is essentially what happened. The “shelter” component of CPI (the one that measures housing costs and that has been stubborn in moving down as quickly as hoped) fell to its lowest monthly level since inflation first began soaring in 2021. This is great news for inflation in general and it contributed to the initial market reaction. Then the “yeah buts” showed up. At issue is the fact that tariffs are increasingly having an impact on certain CPI categories. Granted, it’s not enough to raise the overall price index above forecast levels, but the market decided it was enough to justify the Fed’s “wait and see” approach on rate cuts. Notably, today’s reaction in terms of the Fed rate cut outlook was far milder than the reaction after the jobs report 2 weeks ago, but this one is perhaps more frustrating because the headline inflation numbers suggested the opposite move for rates.

Here’s a cool password: 2 444 66666 8888888 9. (You can figure it out.) I’m no IT wizard, but some are. Do you want AI to open your emails and create drafts for you to reply to them? Fyxer does exactly that. Goldman Sachs is piloting an autonomous software engineer, Devin, from AI startup Cognition, marking a significant advancement in AI integration. Devin, capable of handling complex tasks with minimal human intervention, could soon join Goldman’s 12,000 developers, potentially scaling to thousands of AI engineers depending on use cases. I didn’t make the cut for Facebook, uh, Meta’s new “Meta Superintelligence Labs” group with their salaries in the eight-figure range. (For those of you who think in basis points, that’s north of $10,000,000 out of Mark Zuckerberg.) But everything isn’t peaches and cream. You have stories like, “OpenAI Hits the Panic Button.” While AI governance is a growing concern for financial services leaders, two recent surveys suggest there might be a knowledge and strategy gap at the board level. Nasdaq’s most recent Global Governance Pulse survey notes that board members were asked which skills and experience would expand their board’s composition and ensure alignment to the organization’s strategy, artificial intelligence and machine learning topped the list, according to. (Today’s podcast can be found here and this week’s are sponsored by Ocrolus. Ocrolus is transforming the mortgage industry with AI-powered data and analytics, featuring cutting-edge tools for automated indexing, income analysis, and discrepancy insights that empower underwriters to make timely, confident lending decisions. Hear an interview with Ocrolus’ Rebecca Seward on how Ocrolus is redefining mortgage underwriting with its Inspect platform, enabling real-time condition creation and automated loan reviews to improve quality, reduce costs, and streamline operations for lenders of all sizes.)