More than 4,000 federal workers received notices Friday that their last day will be Dec. 9.

America’s second-largest bank revised its net interest income target upward after what analysts called a “clean” third quarter.

The megalender is accusing a nearby brokerage of skirting labor laws and avoiding significant overhead costs in misclassifying hundreds of employees.

Fairly Flat At Strongest Levels in Weeks

10yr yields ended the day a mere 0.1bp higher than yesterday (4.029 vs 4.028).  Call it “unchanged,” and no one will argue. In this case, an unchanged result means we’re holding at the best levels since Sep 17. MBS managed to add 2bps to yesterday’s close, and are also at 4 week highs. Volume was much lower than yesterday, but still elevated compared to most of last week. That’s interesting considering the narrow range and light volatility. As far as the modest mid-day bump in Treasury yields, there were no obvious triggers apart from arcane speculation surrounding liquidity conditions and funding market stress with traders pointing to a big take up in the Fed’s standing repo facility. This doesn’t really hold water due to the timing of the repo announcement. The only other thought is that we’ve often noted enigmatic volatility on tax deadline and adjacent days.  Either way, it was too small a move to merit any further investigation.

Econ Data / Events

NY Fed Manufacturing 

10.7 vs -1.0 f’cast, -8.7 prev

Market Movement Recap

09:54 AM Slightly stronger overnight and holding gains so far.  MBS up 3 ticks (.09) and 10yr down 2.5bps at 4.003

12:05 PM MBS now down 1 tick (.03) on the day and 5 ticks (.16) from the highs.  10yr up just under 1bp at 4.037

02:49 PM fairly flat after mid-day selling.  MBS unchanged and 10yr up 1.6bps at 4.045

Mortgage rates are based on bonds and bonds are trading at their best levels since September 17th.  Of course there are different kinds of bonds, so we should specify that we’re talking about the bonds that are specifically tied to mortgages (MBS or mortgage backed securities).  With this in mind, it’s no surprise to see mortgage rates also at the lowest levels since September 17th.  The same was true yesterday, but today marked another incremental improvement.  Compared to yesterday, the bond market was actually fairly flat. So why did rates improve? It has to do with timing. Yesterday afternoon saw a decent rally in bonds (rallies = lower rates), but it was late enough in the day that many lenders didn’t bother adjusting their mortgage rate offerings until this morning. Bottom line: mortgage lenders were getting caught up with yesterday’s bond market rally.

While the debate rages on about whether the three colors of candy corn taste different, at the other end of the tech spectrum, lenders are weeding out unused or out-of-date technology, reviewing new tools, all the while looking at bad developments in the IT world. (Speaking of tools, Ben Teerlink, Founder/CEO, MMI, will be interviewed today at 11AM PT on the L1 show.) AI companies are paying people to fold laundry in front of robots so they can learn to do household chores. It’s disappointing that we may never see a robot get tangled in a fitted sheet. Robots and automatic machines aren’t new (the French were cutting edge 250 years ago). But now Americans, including potential borrowers, are losing millions to scammers at crypto ATMs. Crypto scams drew a lot of people who wanted to make money and didn’t care about victims. They abound. Here’s how companies profit. JPMorgan Chase isn’t taking any security chances at its brand-spankin’-new $3 billion headquarters in Midtown Manhattan, so it’s requiring employees to offer up biometric data in order to access the building: biometric access is now required to enter the skyscraper at 270 Park Avenue. (Today’s podcast can be found here and this week’s are sponsored by Floify, an industry-leading point of sale platform. With Floify’s new Dynamic AI feature, lenders can modify applications with no coding required and rely on AI to autofill key application fields, allowing borrowers to fill out only a few fields relevant to their needs. Hear Figure’s Anthony Stratis & West Capital Lending’s Arthur Greenbaum discussing the power of partnership, and why they’re excited about Figure’s new AI-powered DSCR platform.)

Stocks have made a bit of a round trip since last Friday when Trump’s tariff comments sparked a big sell-off.  Bonds benefited from that at the time.  So far this week, stocks have staged a solid comeback–especially today as upbeat earnings and Fed rate cut expectations provide support.  Bonds continue to rally on multiple Fed comments that focus on a weaker labor market underpin an increasingly clear rate cut picture.  Many market participants read yesterday’s Powell comments as endorsing another cut in October.  Bonds mostly had this priced in, but the absence of bad news is good news–at least good enough for more modest gains this morning. That said, gains are tougher to justify from here with yields pushing the lower end of the range boundary. 

Mortgage application activity declined again last week, though the drop was more moderate than the prior week’s pullback. According to MBA’s Weekly Applications Survey for the week ending October 10, total volume fell 1.8% on a seasonally adjusted basis and 2% unadjusted. The Refinance Index slipped 1% from the previous week but remains 59% higher than the same week one year ago. Refi activity has flattened out after September’s surge but continues to hold at elevated levels as some FHA borrowers take advantage of a rate gap of more than 10 basis points below conventional loans. “Mortgage rate movements were mixed last week, with the 30-year fixed rate decreasing slightly to 6.42 percent. Mortgage applications were lower than the week before, as conventional and VA applications saw declines,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “FHA applications saw a stronger week, and FHA refinance applications in particular increased 12 percent as the FHA rate stayed more than 10 basis points lower than the conventional fixed rate. Purchase applications declined for the third consecutive week but remained 20 percent ahead of last year’s pace as improving inventory conditions in certain markets continue to maintain homebuyer interest.” Purchase applications decreased 3% from the previous week on a seasonally adjusted basis and 2% unadjusted, but were still 20% stronger than a year ago. Activity continues to show resilience relative to last year’s depressed levels as buyers respond to slightly better inventory conditions.

If Experian eventually charges for VantageScore 4.0, it will be offered for at least a 50% discount compared to what Fair Isaac Corp. charges for its FICO score.

The San Francisco-based banking giant reported a 9% annual jump in quarterly profits. It also made official its appointment of CEO Charlie Scharf as chairman.