But the industry-backed proposal differs by $13 million from the House version of the appropriation bill and it is not likely to get resolved until after the November election.

As Treasuries advance for a third-straight month, investors are fully pricing in at least two quarter-point rate reductions this year, slightly more than what policymakers have telegraphed.

In a new survey of bank executives from IntraFi, 90% of respondents said instances of check fraud have increased in recent years and half want law enforcement to make check fraud a bigger priority to stop criminals from stealing checks in the mail.

Four conceptual applications were chosen that address pain points in single and multifamily housing.

No Bad News in Today’s Treasury Announcement

There have been a few occasions in the past few years where Treasury’s quarterly refunding announcement sent shockwaves through the bond market.  Today turned out not to be one of them.  Treasury showed traders the light at the end of the issuance tunnel late last year (part of the reason for the big rally in November) and now we’re simply seeing the general fruition of those predictions.  In fact, the Q3 borrowing estimate was more than $100bln LOWER than last time.  Markets don’t have a perfect way to predict how these estimates will change quarter to quarter, but the trading reaction tells us it was only a very small surprise, but also a pleasant one.

Market Movement Recap

10:13 AM Modestly stronger overnight.  10yr down 2.3bps at 4.173.  MBS up 1 tick (.03).

12:15 PM MBS near lows, unchanged on the day.  10yr still down 1.6bps at 4.18

02:40 PM Sideways since 11am.  10yr down 2bps at 4.175.  MBS up 1 tick (.03).

03:10 PM Small improvement after Treasury refunding announcement.  MBS up 2 ticks and 10yr down 2.8bps at 4.168.

Although the range has been very narrow for the past few weeks, average mortgage rates nonetheless fell to the lowest levels in more than 6 months.  Top tier conventional 30yr fixed scenarios are well into the high 6’s now, with our proprietary daily average at 6.81, matching the levels seen on July 15th and 18th.   Rates are driven by the bond market and bonds had a calm and positive day.  There were no major economic reports, but positive momentum remained intact from last Friday’s well-received inflation report.   In addition to economic data, bonds are driven by anything that clearly impacts supply or demand.  As such, when the U.S. Treasury announces updated borrowing amounts on a quarterly basis, it can cause rate volatility.  Today brought the first half of one of these quarterly announcements, but it was largely in line with the market’s expectation.  If there was any impact on bonds, it was modestly favorable, but not enough to result in any mortgage lenders making changes today. The rest of the week is most likely to be determined by economic reports as well as the reaction to Wednesday’s Fed announcement.  The Fed is not expected to cut rates at this meeting, but some investors will be looking for clues about a September rate cut, currently seen as a near certainty.

Language has oddities. For example, plurale tantums: items that are usually referred to in plural, often preceded by “pair of” even when there is only one item: pants, pliers, glasses, scissors, sunglasses, tweezers, etc.) Mortgage banking has its own language. Like “Agencies,” which we accept as being primarily Freddie Mac and Fannie Mae. For fans of the Agencies, I received this interesting anonymous opinion. “Rob, your Commentary noted that Patrice Ficklin, who led the CFPB’s fair lending office since 2011, is leaving to rejoin Fannie Mae. The first thing Patrice should do is run a Fair Lending analysis on Fannie Mae’s book of business. She will find that Fannie Mae would not pass a CFPB fair lending exam based on what I know about racial and social makeup of the last five years of production…as one ex-Fannie Mae employee said to me once ‘we have a segregated RMBS market.’” Far be it from me to address that; you should reach out directly to Freddie or Fannie if you have questions about their respective books of business. (Today’s podcast is found here and this week’s is sponsored by Optimal Blue. OB’s smart solutions automate critical functions like pricing, hedging, trading, and social media. More originators and investors rely upon Optimal Blue’s integrated solutions, data, and connections to support their unique business strategies, no matter how complex. Today’s features an interview with Space Coast Credit Union’s Malik Wilkes that gives a “finger on the pulse” of the credit union segment of our biz and current trends in the space.)

Bonds were moderately stronger overnight with some of the improvement seen right at the start of the session and a majority following the start of European trading.  There were no standout fundamental motivations, but one could argue that follow-through from Friday’s encouraging inflation data is playing a part.  Today’s calendar is the lightest on what will otherwise be an active and important week of econ data and events.  The only notable item is the 3pm ET Treasury refunding estimate.  This is one of two parts of the announcement and both have a track record of moving the bond market.  

The second quarter for the subsidiary of Waterstone Financial posted its highest net income since the same period in 2022, while its volume was the most in seven quarters.

First Foundation in Dallas recently got a $228 million capital injection led by Fortress Investment Group. Now it’s announced plans to pivot away from its heavy focus on multifamily loans, which lost value as interest rates rose.