Fairly Resilient Despite Bumpy Auction

The relevant morning econ data was limited to Jobless Claims. While the weekly and continuing numbers were both higher than expected, it wasn’t a big enough miss to spark any sort of decisive rally in bonds. MBS lost ground heading into the PM hours and lost some more ground after a poorly received 30yr bond auction. But whereas the auction could have been used as a front for additional selling, bonds generally did a decent job of holding their ground in the last few hours of the day. Friday’s calendar is empty. This doesn’t mean we won’t see any volatility–simply that it could not be driven by scheduled events.

Econ Data / Events

Jobless Claims

226k vs 221k f’cast, 219k prev

Continuing Claims

1974k vs 1950k f’cast, 1936k prev

Market Movement Recap

08:31 AM ho-hum Jobless Claims.  No reaction.  10yr up 0.3bps at 4.231 MBS up 1 tick (.03)

11:55 AM Still flat.  MBS unchanged and 10yr unchanged at 4.227

01:06 PM weaker after 30yr auction.  MBS down 2 ticks (.06) and 10yr up 1.7bps at 4.245

02:55 PM avoiding sharper losses.  MBS down 3 ticks (.09) and 10yr up 1.5bps at 4.243

Mortgage rates have barely budged after Monday with the day-over-day change failing to exceed 0.02% on any given day. But today’s budging happened to bring the average 30yr fixed rate to another 10-month low.  Lenders are in the mid 6% range for top tier scenarios. Economic data is one of the common influences for the bonds that underly rate movement. Today’s only somewhat significant report was the weekly jobless claims data.  It would have needed to fall very far from forecasts in order to have a big impact. While it was higher than expected, the “miss” was too small to matter. Today’s improvement has more to do with yesterday’s late day gains in the bond market. Today’s trading has erased those gains, but the market hasn’t moved enough for most lenders to go to the trouble of changing their rates. The implication is that tomorrow morning’s rates would be just a hair higher if the bond market held perfectly steady overnight.

We’re back traveling and packing for the plethora of conferences. Packing and intellect sometimes collide: for the life of me, I can’t seem to grasp this simple video on the moves of how to fold a t-shirt in under two seconds. (It is worth waiting out the ad; show it to your kids.) The Fed doesn’t set mortgage rates, but the markets seem focused on its every move and opinion since its mandate of maximum employment, price stability, and steady inflation is always precarious. The Fed is often a topic on The Big Picture, but this week Katie Sweeney, EVP of Broker Strategy and Advocacy at Rocket Mortgage, is on to discuss the moves on the trigger leads bill with its implications… a big win for the MBA and our biz. Speaking of that organization, the MBA’s Marina Walsh, CMB, reminded me of a its just-released home equity lending study that should be of interest to any originator or company who wants to understand that market and borrower, and how to tap into that business. (Today’s podcast can be found here and Sponsored by Total Expert, the purpose-built customer engagement platform trusted by hundreds of modern financial institutions. Total Expert turns customer data into actionable insights that help lenders engage and guide consumers through complex financial decisions. Hear an interview with BeSmartee’s Tim Nguyen on why modern mortgage lenders need configurable POS solutions that are fast, flexible, and built to adapt in any market.) Products, Services, and Software for Lenders and Brokers

The week’s last hope for any signs of life from economic data has come and gone with this morning’s Jobless Claims.  To be fair, there was never really much of a chance for this particular data to inspire any significant reaction in bonds.  There may be signs of weakness in the labor market, but they’re not readily seen in claims data because the weakness isn’t a result of people losing jobs as much as it about not finding jobs.  In that sense, the continuing claims portion of the jobless claims report is sort of capturing the phenomenon (i.e. weekly initial claims shows no increase in new job losses, but continued claims shows more and more people remaining unemployed for longer).  Despite another cycle high, continued claims weren’t far enough from forecast to inspire any reaction in bonds.  Both MBS and Treasuries are starting the day flat.

Citigroup Inc. Chief Executive Officer Jane Fraser met with President Donald Trump on Wednesday to pitch public stock offerings for mortgage giants Fannie Mae and Freddie Mac.

MBA urges GSEs to drop tri-merge credit rule, calling it outdated and costly as FHFA weighs broader credit reporting and scoring reforms.

One loan sale is planned for Wednesday, while the other is tentatively happening in September. All-in-all, the two offerings are worth close to $1 billion.

The company also added a new marketing executive to drive growth, with current expansion coming after it also secured an origination purchase deal last month.

While the company exceeded analyst expectations on several fronts, its Q3 outlook includes softer revenue and a slide back into negative EBITDA.

More Ground-Holding Despite Weird Intraday Spike

This morning’s commentary led with our desire to avoid jinxing this week’s flat, boring market movement with rates at long term lows.  But for a few minutes mid-day, it looked like the jinx was real. At 11:35am, yields shot 3bps higher in a matter of minutes and in exceptionally heavy volume. Several hours later and there are still no solid explanations for the mini-drama. Thankfully, explanations are less important after Treasuries fully erased the mid-day weakness.  Mystery moves like this happen.  They usually offer clues by end of the trading session, but traders/analysts only tend to ravenously pursue those clues when the day-over-day movement is much larger.  Since today’s wasn’t, this one will be forgotten and chalked up to a very small number of tight-lipped traders making very big moves that caused a mini mid-day snowball. 

Market Movement Recap

10:31 AM Initially weaker overnight, but rallying back since 5am.  10yr now roughly unchanged at 4.214 and MBS up 1 tick (.03).

12:18 PM Big selling at 11:35 and mostly stabilized now.  No explanations available.  10yr was over 4.25, but now up only 1.9bps at 4.233.  MBS are back to unchanged after being down an eighth of a point.

01:26 PM modestly weaker after 10yr Treasury auction.  MBS down 1 tick (.03) and 10yr up 3bps at 4.244

04:11 PM Heading out with MBS up 2 ticks (.06) and 10yr up 1.2bps at 4.226