The head of data and digital at Ally Bank came up with protective measures governing the use of generative AI and organized “AI Days” for employees to learn about Ally’s progress.

A national measure of prices rose 6.3% from a year earlier, less than the 6.5% gain in March, according to data from S&P CoreLogic Case-Shiller.

Decent 2yr Auction, But No Major Inspiration For Bonds

We’ve increasingly revisited the concept of the “inside day” recently and with 2 days down, we could actually shift gears and to an “inside week.”  In other words, both yesterday and today’s trading ranges can be easily contained inside the trading range established last week.  In fact, everything fits in last Tuesday’s range, and we’d have to go back yet another week (to CPI/Fed week) to see any actual volatility.  That’s not a bad thing.  It’s just a thing.  It will change eventually, but it didn’t change today.  The biggest market mover was Canadian CPI of all things–something we basically never watch or mention, but those are the lengths one must go to on inside weeks.  Tomorrow’s 5yr Treasury auction could be a bigger player than today’s 2yr although the latter did help bonds hold the line without losing more ground.

Econ Data / Events

Philly Fed Non-Manufacturing Index

15.1 vs 7.3 previously

Canada CPI

0.6 vs 0.2 month over month

Case Shiller Home Prices

1.4 vs 1.6 prev

FHFA Home prices

0.2 vs 0.3 f’cast, 0.1 prev

Consumer Confidence

100.4 vs 100.0 f’cast, 101.3 prev

Market Movement Recap

08:25 AM Modestly stronger overnight.  MBS up 2 ticks (.06) and 10yr down 2bps at 4.212

08:51 AM Some weakness after data.  MBS down 1 tick and 10yr up 1.2 bps at 4.244

10:42 AM Off the weakest levels.  10yr up just under 1bp at 4.24 and MBS down only 1 tick (.03)

02:05 PM Modest bounce back after 2yr auction, but still in negative territory.  MBS down 2 ticks (.06) and 10yr up 0.8bps at 4.241

03:05 PM Slightly stronger in Treasuries with 10yr now unchanged at 4.234.  MBS still down 2 ticks (.06).

Mortgage rates have been flatter than the earth according to the flat earth society.  Much like the actual earth in many areas in the middle of the country–and especially Florida–things can be flat for as far as the eye can see, but the farther one moves along, the more they’ll see the contour. For now, though, mortgage rates are in Florida (or IL, ND, MN, etc…).  Conventional 30yr fixed rates inched up 0.01% from yesterday–effectively unchanged and in the same tight range of 7.01 to 7.04 seen since last Monday. Much like the actual geology of the planet, this isn’t a conspiracy.  It’s just the way things are relative to what we can see around us.  It will change, but not until markets are forced to confront mountains of more important economic data and events.   Tomorrow’s events have only a slightly better chance of forcing the bond market (and thus, mortgage rates) to make bigger moves.  Friday continues to be the biggest risk/opportunity, but it’s really the following 2 weeks of data that are almost certainly destined to deliver peaks and valleys.

Two major home price indexes had very different conclusions about the growth of annual home prices in April, but each showed a significant month-over-month uptick.  The S&P CoreLogic Case-Shiller U.S. National Home Price Index fell off its March pace while the Federal Housing Finance Agency’s (FHFA’s) Home Price Index (HPI) moved higher. Case-Shiller’s non-seasonally adjusted National Index April covering all nine U.S. census divisions, moved from 0.7 percent annual growth in March to a 0.2 percent decline in April. Both composite indexes increased on the rate of decline posted the previous month. The 10-City, which was down 0.7 percent on an annual basis the prior month lost 1.2 percent in April while the 20-City posted a 1.7 percent year-over-year loss, down from 1.1 percent in the previous month. Miami reported the highest 12-month gains among the 20 cities in April at 5.2 percent. Chicago debuted in the top three in second place with a 4.1 percent gain and Atlanta pushed Charlotte out of third place, increasing by 3.5 percent. Annual price changes were lower than the prior month in 17 of the 20 cities. Only Boston, San Francisco and Cleveland managed to increase their appreciation rate. Monthly changes were all positive. Before seasonal adjustment, the U.S. National Index posted a 1.3 percent month-over-month increase in April while the two composites were 1.7 percent higher. After seasonal adjustment, the National Index posted a month-over-month increase of 0.5 percent, while the 10-City and 20-City Composites gained 1.0 percent and 0.9 percent, respectively.  

Everyone’s above average, right? If you are a lender and making money, you’re in the majority. It’s not that you’re not special, it’s just that with cuts and servicing income, and unprofitable companies going away, most companies are in the black: In the first quarter, 59 percent off all mortgage banking companies were profitable per the MBA Performance Report, buy it for details. Is our government profitable? Of course not, almost regardless of Administration. The federal budget deficit is expected to swell to around $1.9 trillion this year, according to the Congressional Budget Office, which was higher than its previous estimate of $1.5 trillion. This takes into account increased spending for student loans and Medicaid as well as the recently passed $95 billion foreign aid package. National debt is even poised to top $56 trillion over the next 10 years, or 122 percent of GDP, surpassing the 106 percent seen in 1946 after World War II. Meanwhile, the eurozone is facing debt issues of its own, with the ECB warning eight of its members (including Belgium, France, and Italy) over their excessive budget deficits. 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 FinLocker’s Brian Vieaux on bringing consumer permission data to property searches and originations.

But those in opposition are still giving the agency props for how it carried out the new product approval process for the first time.

The wholesale lender called the claims in the Hunterbrook-related class action “meritless” and an attempt to smear its reputation, in a recently filed motion to dismiss it.

Home price appreciation and favorable economic factors have led to consistent loan performance, but prepayments are increasing with an uptick in housing turnover, according to Morningstar DBRS.

The Department of Justice filed an amicus brief in a case that also involves the National Association of Realtors and its rules around multiple listing services.