Although mortgage rates are based on bonds, and although bonds are constantly on the move throughout the day, mortgage lenders prefer to set the day’s rates only once. From there, if bonds make enough of a fuss, lenders will issue mid-day changes for better or worse. Today was a bit of a roller coaster, which is not surprising considering the extent to which stocks and bonds have been correlated recently. Stocks took a dive early in the day and bond yields (aka rates) followed. This allowed the average lender to set the lowest 30yr fixed mortgage rates since mid October. As the day progressed, stocks and bonds bounced back in the other direction and the move was big enough for most mortgage lenders to reprice back toward slightly higher rates.  The bad news is that we’re no longer at the lowest level in 4 months, but the good news is that we’re still a hair lower than yesterday (or any other day since December 8th. 

Some argue that “March 4th” is the only date that is also a command (march forth), while others disagree and say that any date in March is also a command. Some things aren’t always clear. In a more important matter, U.S. Commerce Secretary Howard Lutnick said he would strip out government spending from the gross domestic product (GDP) report, but gave no indication how soon this change might happen, while dismissing fears of a possible recession. Treasury Secretary Scott Bessent is confident that inflation will reach the Federal Reserve’s 2 percent target. “I would expect that very quickly we will be down to the Fed’s 2 percent target,” Bessent said. “So, I’m expecting inflation to continue dropping over the year.” Investors are increasingly positioning against the dollar, citing signs of a cooling US economy and potential damage from President Donald Trump’s tariff plans. While the dollar recently surged following tariff announcements, market expectations for Federal Reserve rate cuts have grown, diminishing the dollar’s appeal. Meanwhile, lenders are continuing to look at technology, and today’s 2PM ET Advisory Angle with the STRATMOR Group focuses on AI: All Aboard the AI Train: A Practical Roadmap for Lenders. (Today’s podcast can be found here and sponsored by Floify. Floify is an easy-to-configure point-of-sale platform that allows each branch or loan officer to customize its look and feel to meet the needs of their lending team, homebuyers, and market. Hear an interview with HomeVision’s Vincent Chu on how AI-driven underwriting solutions can be both effective and safe for lenders.)

While much of the recent improvement in the bond market can be tied to various economic reports, there’s been more than a normal amount of improvement due to “risk-off” trading. In other words, economic concerns led to general “sell stocks, buy bonds” vibes. After taking a quick break from the pity party on Friday, the stock market is back at it today. Bonds are once again getting some spillover, but we’re definitely starting to see some hesitation. Stocks are like the friend who wants to keep partying. Bonds are like the friend who has to work in the morning.

This isn’t phenomenon isn’t limited to the past 24 hours.  If we go back to the start of the risk-off episode, we can see bonds consistently take a more measured approach. A chart of yields vs stocks doesn’t show the disparity accurately, so the following chart shows the percent change in stock prices vs Treasury futures prices (a price vs price comparison in percent-change terms). 

President Donald Trump said he would plow ahead with new tariffs on Canada and Mexico starting Tuesday, a broadside against the two biggest US trading partners that underscores his push to remake global trade.

The acquisition bucks recent trends that saw depository banks eliminate mortgage lending, but the 2025 market environment may be favorable for consolidation.

At a court hearing on Monday, lawyers for the Trump administration said statutorily required work is being done by the Consumer Financial Protection Bureau, while the union claimed the government is trying to shut the agency down.

Its Arc Home lending business made money in December and January as the company leans more into home equity originations, which helped financial performance.

The companies did not disclose a purchase price, nor how many of the Houston-based Nations Reliable Lending employees would join the Ohio firm.

Bonds Start Week Off With a Bang

After a weaker overnight session, bonds bounced back swiftly after this morning’s ISM Manufacturing data. The headline was roughly as-expected, but sharply weaker employment and “new orders” outweighed the highest “prices paid” component in more than 2 years. It took less than 15 minutes for moderate losses to flip to moderate gains.  Very little happened after that apart from a slow and mostly steady trickle to even stronger levels. It bears repeating that the gains were centered on econ data as opposed to any other news. 

Econ Data / Events

ISM Manufacturing 

50.3 vs 50.5 f’cast, 50.9 prev

ISM Prices

62.4 vs 56.2 f’cast, 54.9 prev

ISM Employment

47.6 vs 50.1 f’cast, 50.3 prev

ISM New Orders

48.6 vs 54.6 f’cast, 55.1 prev

Market Movement Recap

10:09 AM Bouncing back to positive territory after ISM data.  MBS unchanged and 10yr down 2.1bps at 4.194

01:10 PM Stock losses spilling over to help bonds again.  10yr down 4.1bps at 4.174.  MBS up 2 ticks (.06).

03:22 PM Best levels of the day.  MBS up 3 ticks (.09) and 10yr down 5bps at 4.165

Treasury Secretary Scott Bessent expects the U.S. housing market to quickly pick up steam after recent indicators came in below forecasts.