The government-sponsored enterprise has reportedly added a new vendor to a test in which it buys certain loans without title insurance or attorney opinion letters.

Federal Reserve Gov. Christopher Waller said that criticisms of the Fed’s balance sheet and calls to return to a scarce reserves system are misinformed, saying that much of the central bank’s balance sheet is the result of activities outside the Fed’s control.

Several large banks are deploying agentic AI. There’s a big difference between managing people and managing AI agents.

The New Hampshire congresswoman promised new investigations into scam drivers, including AI and digital payment platforms.

Fed Speakers and Auction Help Bonds Hold Steady

Bonds technically lost a small amount of ground today, but it’s just as fair to say that they’re holding steady on the week.  In fact, closing yields today were right in line with last Thursday’s closing levels.  This might not have been the case if not for today’s Fed speakers–several of whom reiterated dovish messages about being able to cut sooner rather than later. Other comments reiterated the notion that tariff-driven inflation should start to show up in next week’s data (further increasing the stakes for CPI). The Treasury auction wasn’t especially strong, but we occasionally see bonds improve simply because the auction cycle is over for any given week. While this isn’t a big move, one could argue that it also helped the afternoon mini-rally. 

Econ Data / Events

Jobless Claims

227k vs 235k f’cast, 232k prev

Continued Claims

1965k vs 1980k f’cast, 1955k prev

Market Movement Recap

08:39 AM MBS are down an eighth and 10yr yields are up 1bp at 4.345.

01:03 PM Pretty boring 30yr bond auction.  Sideways at weaker levels with MBS down 6 ticks (.19) and 10yr up 2.9bps at 4.365

02:30 PM Decent little bounce after Waller comments.  MBS down just over an eighth and 10yr up less than 1bp at 4.344

05:05 PM Modestly weaker at the close, but broadly sideways on the week.  MBS down 5 ticks (.16) and 10yr up 1.1bps at 4.347

Most of this week’s mortgage rate movement has been an aftershock following last week’s jobs report. That data sent rates quickly higher and that momentum has gradually faded over the past few days. In fact, yesterday finally saw an improvement.  Now today, things are minimally changed, depending on the lender. Most lenders issued at least one mid-day change yesterday as the bond market improved. Those lenders are sideways to slightly higher today, but not enough for the average loan quote to be detectably different from yesterday.  In a slightly broader context, rates are essentially sideways since Monday. In fact, our daily rate index is currently exactly where it was on Monday afternoon. In addition to being the least exciting outcome, it’s also probably the most logical, given the absence of big-ticket news and economic data this week. Next week is a different story with the release of hotly anticipated inflation reports.

Lenders and servicers have entire sets of policies and procedures based on the Federal Emergency Management Agency (FEMA) declaring an emergency in a given area. President Trump says FEMA should be eliminated, which would definitely impact this process. Texas officials weren’t fans of FEMA until they needed it. Unfortunately, FEMA has become politicized. Generally, how does politics work, regardless of political party? President Trump’s spending bill passage was in trouble, and it needed Alaska Senator Murkowski’s vote. And that is how 150 Eskimo whalers saw a fivefold increase in the amount they claim in expenses against tax every year, and the subsidy for Alaska’s rural hospitals was doubled from $25 billion to $50 billion. Meanwhile, professional poker players and sports bettors are demanding a change to the massive tax and spending bill since it changed the way gamblers deduct their losses on their taxes. Currently, gambling winnings can be offset by 100 percent of gambling losses. But the deduction will be lowered to 90 percent of losses in the new bill, which professional gamblers and tax professionals say could lead to taxes on income that gamblers did not earn. So “if they won $100,000 and lost $100,000, they still owe money on the $10,000” because only $90,000 can now be deducted, said Rep. Dina Titus, a Democrat representing Las Vegas who introduced a bill this week to reverse the tax change. (Today’s podcast can be found here and this week’s is sponsored by Truework, the only all-in-one, automated VOIEA platform that helps mortgage providers achieve up to 50 percent cost savings with an industry leading 75 percent completion rate. Today’s has an interview with Pennymac’s Kim Nichols on the current state of the broker channel, market dynamics, and strategies shaping the future of third-party origination.)

You would be hard pressed to find a week with less to offer in terms of scheduled economic data.  In fact, it’s not an overstatement to say that regular old weekly jobless claims data was the only relevant report of the week. Unfortunately for fans of low rates, it’s not showing any signs of cracks in the labor market (227k vs 235k f’cast). Continuing Claims, while still elevated, also managed to remain below the longer term highs from 3 weeks ago. There hasn’t been a huge reaction in the bond market, but perhaps enough to say that we’re now in modestly weaker territory instead of being closer to unchanged.

The labor market was a bigger point of discussion in the Federal Reserve’s most recent monetary policy-setting meeting, but officials were divided about the path of future actions.

Growth in conventional originations at U.S. banks came with the unexpectedly rapid rise of 30-year fixed interest rates in 2022, Federal Reserve researchers found.