Market movement continues suggesting increased focus on labor-related economic data.  This morning’s JOLTS (job openings and labor turnover survey) is the latest example.  Job opening came in at the lowest level since early 2021, when they were rocketing higher from the lockdown lows a year earlier.  Present levels are still a bit higher than 2018, but the trend is bond-friendly.  Notably, this release corresponds with the last nonfarm payrolls report and not the one coming out in 2 days.  

Above: job openings almost back to highest pre-covid levels

Above: 10yr yields have been very well behaved regarding the 3.8 to 4.0 range that was established in early August, although the ceiling is arguably more like 3.93 to 3.95.

I don’t know what, exactly, separates irony, satire, or paradox. Whatever category this falls into, it’s a classic tale of biblical proportions. (Other disaster news below.) While we’re on seafaring vessels, some parties you remember, others not, but I’m sure that I’ve never been to a yacht party. But then again, I don’t work with title companies in the Washington DC area. Thank you to Ken S. who passed along this story about how four title companies doing business in D.C. will be paying $3.29 in penalties for operating an illegal kickback scheme. Of course, state and local governments (in this case, the District of Columbia) aren’t the only ones tuned in to kickbacks. The Consumer Finance Protection Bureau is also out there, watching: Recall its kickback fine announcement regarding Freedom Mortgage a year ago. (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with #1 YouTube realtor Jason Walter and originator Jim Black on building your business through authentic social media.) Lender and Broker Software, Services, and Loan Programs Tappable equity (i.e., the amount a homeowner can borrow against while keeping a 20% equity stake) has grown by 100% since late 2019*. Many homeowners are “locked in” to their homes due to high interest rates and they need extra money to cover living expenses. The time for lenders to prepare is now. While the valuation process can be one of the most time-consuming and costly parts of home equity loan origination, ICE’s automated valuation models (AVMs) and digital valuation solutions can help change that and increase your success and profits. Download the new eBook, How to grow a successful home equity lending business, today to learn how ICE’s solutions can help you quickly gain an advantage in today’s home equity lending market. *Source: ICE Mortgage Monitor

Interest rates continued their slow decline last week while application volume is inching up almost as slowly. The Mortgage Bankers Association (MBA) reports a 1.6 percent increase in its seasonally adjusted Market Composite Index , a measure of mortgage loan application volume. On an unadjusted basis, the Index gained 0.2 percent over the prior week. Applications for home purchase financing took the lead, rising 3.0 percent on a seasonally adjusted basis and was up 1.0 percent before adjustment. The Purchase Index has now narrowed what was once a double-digit deficit to a -4.0 percent year-over-year gap. [purchaseappschart] The Refinance Index decreased 0.3 percent from the previous week and was 94 percent higher than the same week one year ago. Refinance applications made up 46.4 percent of the total, down from 46.6 percent the previous week. [refiappschart] “Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly to 6.43 percent. Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels, with government purchase applications leading the increase,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “ Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments. Similar to purchase activity, refinance activity has picked up across the various loan types.” 

The new exec is a former CEO of Sagent and Cloudvirga, and worked at Black Knight for over a decade.

Doug Duncan joined Fannie Mae in 2008 after holding the chief economist position at the Mortgage Bankers Association for almost 16 years.

In August’s roundup of top mortgage news: The Consumer Financial Protection Bureau sides with plaintiffs against Mr. Cooper in alleged “junk fee” lawsuit, updates to 203(k) and more.

Mr. Cooper will be filing a motion to dismiss a data breach-related class action by Sept.13, documents show.

Melody Taylor, the executive director of the Property Appraisal and Valuation Equity task force, said the interagency group went above and beyond expectations. She also defended it against common attacks from working appraisers.

No Major Reaction to Data, But Data Remains Relevant

As with most “first weeks of the month,” this one has potentially significant economic data every single morning.  With ISM Manufacturing kicking things off, today was no exception, but it didn’t end up having a big impact.  Considering the near perfect alignment with expectations, that’s not much of a surprise.  The flood of “new month” trading positions ended up being a much bigger market mover (well before the data).  Weakness in the stock market also helped drive some safe haven buying in Treasuries. 

Econ Data / Events

S&P Manufacturing PMI

47.9 vs 48.0 f’cast

ISM Manufacturing PMI

47.2 vs 47.5 f’cast

ISM Prices

54.0 vs 52.5 f’cast

Market Movement Recap

09:40 AM New month trading = gains for bonds.  10yr down 5.2bps at 3.852.  MBS up 6 ticks (.19).

12:48 PM still stronger but off best levels.  MBS up 5 ticks (.16) and 10yr down 4.7bps at 3.857

02:18 PM Flat at the same levels as the last update.  10yr down 5.3bps at 3.851

You never know what you’re going to get on the days surrounding a 3 day weekend for financial markets, and that’s doubly true when it corresponds with the final/first trading day of the month.  Despite all of those potential curveballs, the bond market stayed calm enough for mortgage rates to do the same.  Friday took rates slightly higher, but that modest move has been erased at the start of the new week/month. Each of the next 3 days contains important economic data with the power to impact rates.  The most important report of the week (and the month, for that matter) is Friday’s Employment Situation (aka “the jobs report”).  This report is especially important as it has a chance to bolster or refute the case made by the previous report (the one that was much weaker than expected, thus resulting in sharply lower rates). In general, stronger data will put upward pressure on rates and vice versa.