It’s been an interesting morning for the bond market so far.  ADP employment came in much stronger than expected.  15 minutes later, Q3 GDP was slightly weaker (2.8 vs 3.0) but with higher core inflation seen in core PCE prices (2.2 vs 2.1).  This is the only Q3 GDP report that is a relevant market mover because the next two will be exceedingly stale by the time they come out.  Bottom line, between ADP and PCE, bonds had a reason to sell and that’s what they did… at first. A few short minutes after GDP, 10yr yields turned around and moved to the lows of the day.  This is a bit deceptive considering what’s going on in the short end of the yield curve where 2yr Treasuries are losing much more than 10s are gaining. 
Moreover, as the morning progresses, 10s are moving into weaker territory (just not as weak as 2s).

Any time you see a big discrepancy between 2 and 10yr trading, consider that the market may simply be focusing on something that is impacting Fed rate cut/hike odds.  That is arguably the case this morning, with the data causing traders to pare bets on the Fed’s rate cut trajectory–not so much for the next meeting or two, but more so for the first half of next year.

August’s Corelogic S&P Case-Shiller Home Price Index was down 0.13% versus July, affected by tougher housing markets in the South and West.

The Dallas-based bank swung to a loss in the third quarter after reclassifying a large bundle of multifamily loans that it plans to offload under a recently announced strategy pivot.

The lawmaker said leadership on the House Financial Services Committee is supportive of the legislation, which would limit the ability of credit-reporting agencies to sell homebuyer information to financial service providers.

The REIT’s Newrez arm suffered a servicing valuation hit, but reported gains across each of its origination channels.

Treasury Secretary Janet Yellen announced an initiative aimed at enhancing financial inclusion. The plan includes calling on U.S. banks to participate in upholding fairness and expanding consumer financial access.

Mortgage rates tend to be updated only once per day.  Lenders set rates based on trading levels in mortgage-backed securities (MBS) which are essentially bonds that are tied to cash flows from groups of mortgages.  MBS move throughout the day much the same way that US Treasuries do.  If they move enough, lenders can issue mid-day changes to the rates they published earlier in the day. Today began with Treasury yields in higher territory and MBS in weaker territory.  That almost always means that mortgage rates will come out higher than the previous day and indeed they did!  The average lender moved up to 7.08% from 7.00% on a top tier 30yr fixed scenario.   Bonds improved in the afternoon by enough for lenders to reprice.  That brought the average down to 7.03% which is obviously still a bit higher than yesterday’s 7.00%.  Bottom line, today’s rates marketed another multi-month high. Expect volatility potential to remain elevated through the 2nd half of next week at the very least with each day between now and then at risk of fairly substantial movement.  The riskiest days are this Friday, next Wednesday, and next Thursday due the jobs report, election, and Fed announcement. 

Heard in the hallways here at the MBA’s annual convention in December. “I wonder if the MBA’s volume estimate of $2.3 trillion for 2025 includes all of the hard money deals that I’m doing? Me and every broker I know is doing them: why make 1 point when I can make 3-4 points?” “I’m exhausted. The time change Sunday can’t come soon enough.” “Every lender out there should be ready to help borrowers regardless of the outcome of the election. Betting on a coin toss is no path to success.” “Rob, I hear a lot about ‘heavy lifts.’ Where I come from, that means ‘pain in the a$$.” “I’ll be happy when Fannie and Freddie stop jacking up their gfees without warning… Don’t they know that hurts our pipelines?” “Have you seen all the vendors advertising AI in their booths?” I have indeed, but it is certainly a hot issue, although whether it is life changing remains to be seen. On today’s Mortgages with Millennials, Credit Karma’s Arun Mohan will be interviewed about AI, technology, and how it may impact the mortgage workforce. (Today’s podcast can be found here, and this week’s is sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Hear an interview with Gulf Coast Bank’s Joe Uzee on the two sides of the national flood insurance debate and his thoughts on how we can lower insurance premiums and promote home affordability.) Lender and Broker Software, Services, and Products

As we’ve noted on many occasions in the past few years, JOLTS (the Job Openings and Labor Turnover Survey) used to be a non-event in terms of economic data moving markets.  That changed in an obvious way over the past 2 years and there have been a few weeks where it was arguably the biggest market mover. That level of impact has subsided in recent months, but it’s still moving the needle as seen with this morning’s weaker-than-expected result.  Were it not for the stronger Consumer Confidence data, we’d likely be seeing a better recovery.  As it stands, bonds are still in moderately weaker territory heading into the late AM hours.