From a “dislocation” in single-family servicing to a spike in a multifamily performance indicator, Q2 numbers point to emerging opportunities and risks.

How challenges created by climate change and some regulations related to it can create new avenues for business according to Chief Credit Risk Officer of Planet Home Lending.

What’s Up With ‘Secret’ Jobs Revisions?

When it was limited to social media, it was one thing, but alarming headlines regarding seemingly under-reported labor market revisions hit the mainstream today.  Given the big role or the labor market in the rate world these days, that seems highly relevant at first glance.  But as was the case the last time the QCEW (Quarterly Census of Employment and Wages) was revised, there was plenty of sound and fury with very little significance for markets.  The revision will be out on Wednesday morning.  It isn’t a new jobs number, and the market already expects a negative revision between 600k and 1m for the 12 months ending March 2024.  Why all the focus on this topic (which pertains to data that’s almost 6 months old)?  Because it was a very boring, low-volume, uninspired day for bonds despite incidental gains.

Econ Data / Events

Leading Indicators

-0.6 vs -0.3 f’cast, -0.2 prev

Market Movement Recap

09:04 AM

Roughly unchanged overnight but gaining ground early.  MBS up 3 ticks (.09) and 10yr down 3.5bps at 3.837

01:05 PM

Best levels of the day.  MBS up 5 ticks (.16) and 10yr down 5.2bps at 3.82

03:34 PM

sideways at best levels.  No change from the last update and minimal movement since then.

File today under “nice.”  While it wasn’t amazing, significant, or even the byproduct of any interesting events, mortgage rates managed to drift modestly lower, ultimately matching their lowest levels since August 5th.   The lowest rates in just over 2 weeks might seem like it’s worth more enthusiasm, but we didn’t learn anything new about the current trends that we didn’t know yesterday.  Simply put, there was a ton of rate volatility earlier in the month and we’ve been in a slow, largely sideways grind since then as we wait for more compelling motivations. The average lender remains near 6.5% for a top tier, conventional 30yr fixed scenario.

Sometimes things are confused with other things. (What do racoons think of Tesla trucks? Those trucks are easy to make fun of.) There isn’t a lot of confusion among the 700+ people attending the Western Secondary here near Los Angeles: stay in business, help consumers, and achieve the best execution in the secondary markets to help LOs and AEs. Part of that is keeping up on regulations, and today at 3PM ET is a free 45 minute webinar: “Regulation Central”, sponsored by Polunsky Beitel Green and featuring attorneys Peter Idziak and Brian Levy, with AHMC President Matt VanFossen. Of course, interest rates factor into things. The consensus among “those in the know” here at the conference is that, although the Federal Reserve’s Open Market Committee will start reducing overnight fed funds next month, most or all of this is already priced into the bond market, and therefore rates. So, if you like mortgage rates where they are, good, as they may be around these levels for a few more months. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a Warranty, eliminating repurchase worries. Hear an Interview with MBA’s Sasha Hewlett on capital markets prerogatives and what the MBA is watching in the secondary markets.) Lender and Broker Software, Services, and Products Down Payment Resource (DPR) is a company on a roll! Fresh off a strong showing of its Encompass® LOS integration at CMBA Western Secondary, EVP of Product and Operations Sean Moss and VP of Sales and Business Development Brad Cardwell head to Denver next month for TMC’s “A Mile Above.” A fitting next stop for a company going a mile beyond to help loan officers using Encompass dynamically view available down payment assistance (DPA) programs for borrowers based on their location, occupation, income, and other factors. Using a different LOS platform? That’s fine too. DPR’s software solutions can connect lenders of any size or stripe to its massive and national 2,400+ program database. Keep those doggies rolling! Catch up with Sean and Brad at TMC or grab a spot on Brad’s calendar any time to get a demo of DPR’s lender suite.

While there will certainly be some excitement at some point in the future (possibly even the near future), and while we are already well acquainted with exciting times in the past, there are occasionally unavoidable dead zones in the volatility landscape.  We’re in one now.  There are no relevant economic reports on tap and no significant headline market movers.  Serendipitously, bonds are slightly stronger than yesterday, but when 11 out of the last 12 trading days have failed to move outside the range set on a single day (NFP Friday, Aug 2nd), gains and losses are an illusion.

Four companies are fighting CFPB enforcement actions by claiming the agency cannot be funded by the Federal Reserve, which has not been profitable since 2022. The consumer bureau calls the new legal theory “meritless.”

The possibility of moving stalled housing bills forward combined with promises of down payment assistance is offering hope to housing advocates.

Capacity reductions seem to be in their endgame as clients are looking to focus on revenue growth and market share, Boston Consulting Group said in its second quarter 2024 wrap.

Wall Street strategists are recommending taking advantage of declines in market-based gauges of future inflation to build up protection on the cheap.