The suggested order would require Freedom Mortgage to pay $3.95 million to settle allegations that it botched its reporting of customer data to the watchdog.

Additional Mid-Day Gains Independent of Data and Events

Bonds traded the day in two distinct sections.  First up was the reaction to the Retail Sales data with a logical rally following the weaker results.  Gains weren’t especially huge and a modest correction lasted until 11am.  At that point, the second shift began with volume profiles suggesting position squaring ahead of Wednesday’s holiday closure.  The preponderance of Fed speakers could also have been deemed supportive, but the timing and trading volumes don’t support that conclusion very well.  This mini bull run ended with the 20yr bond auction which caused brief, 2-way trading without leaving a lasting impression.  Bonds were flat after that.

Econ Data / Events

Retail Sales

0.1 vs 0.2 f’cast
last month revised down to -0.2 from 0.0

Industrial Production 

0.9 vs 0.3 f’cast, 0.0 prev

Market Movement Recap

08:46 AM flat overnight with a modest rally after Retail Sales.  MBS up nearly a quarter point.  10yr down 4.3bps at 4.24.

10:21 AM Backtracking from AM gains a bit.  10yr down 2.2bps at 4.26. MBS up 3 ticks (.09).

01:08 PM stronger into the auction and little changed after.  10yr down 6.2bps at 4.22.  MBS up a quarter point.

Mortgage rates began the week with a modest move back up and over the 7% threshold, but managed to erase some of those losses today.  The improvement followed this morning’s Retail Sales data which came out weaker than expected. Mortgage rates are based on trading levels in the bond market.  Bonds pay attention to multiple cues at any given time.  Major economic reports are always among those cues as the health of the economy tends to coincide with rates (i.e. stronger = higher).  Retail Sales isn’t as big of a report as the Consumer Price Index (CPI) or The Employment Situation (the jobs report), but it’s a respectable supporting act.  Sales growth was surprisingly high in the data that came out in March and April.  May’s report showed a correction back to 0.0% growth.   Today’s report came in just barely positive at 0.1–a far cry from the 0.6 level 2 months ago and below the median forecast of 0.2.  In addition, it included a revision to May’s report from 0.0 to -0.2.  All told, it painted a less upbeat picture for the American consumer compared to a few months ago. A slower economy is less able to sustain higher interest rates for a variety of reasons–not the least of which being the suggestion of slower price growth.  With that, bond traders bought more bonds, thus pushing bond prices higher and yields (aka “rates”) lower.  Tomorrow is a market closure for the Juneteenth holiday.  Trading resumes on Thursday but we’ll be waiting until the end of next week for the next round of big ticket economic data.

It’s been 55 years since Bryan Adams’ Summer of ’69. (That’s 55 years prior to the latest CFPB action against a lender.) Here in Hawai’i, the population during that time has increased, but has leveled off in recent years at about 1.4 million (for perspective, matching San Diego’s population) housed in 572,000 housing units (62 percent owner occ). Nationwide, “tying the knot” before buying a place has become more optional over time. The U.S. Census Bureau released estimates showing that married-couple households made up 47 percent of all households in 2022, down from 71 percent in 1970. Estimates from the America’s Families and Living Arrangements also show that about 80 million U.S. households in 2019 were family households. Of those, 58 million were married-couple households, about 6 million were a male householder with no spouse present, and 15 million were a female householder with no spouse present. Additionally, nonfamily households were about 19 percent of all households in 1970, but by 2022, they made up about 36 percent of all households. Women living alone made up the largest percentage of nonfamily households in both 1970 (12 percent) and 2022 (16 percent). Fabled bachelor pads? The share of households with men living alone grew from about 6 percent in 1970 to about 13 percent in 2022. Today’s podcast is found here, and this week’s is Sponsored by Quontic whose mission is to help creditworthy borrowers obtain home loans and give them the “yes” they’ve been waiting for. Hear an interview with attorney Brian Levy on the Consumer Finance Protection Bureau’s inquiry into junk fees contributing to increasing mortgage closing costs.

It’s nearly impossible to avoid hearing the phrase “data dependent” when following financial markets these days and this morning’s movement is the latest reminder.  A mere miss of 0.1 vs 0.2 in Retail Sales has resulted in an immediate and obvious bond market reaction, even if it hasn’t been extreme in terms of the level of improvement. 

It also clearly benefited from a larger downward revision to last month’s reading (-0.2 vs 0.0).  The net effect is a move to the lowest yields of the week, but not as low as those seen last Friday. 

With the 20yr bond auction this afternoon and a market closure tomorrow, it would be a surprise to see traders try to improve on these gains without a surprise of some sort in the news.

Some banks with large commercial real estate concentrations are seeing their stock values take a roller-coaster ride as investors discount their assurances about the wobbly asset class.

The HUD agency contends that the bank’s agreements involving certain reverse-mortgage assets call for the closely watched case to be filed there.

The partnership between personal finance platform Esusu and the National Rental Home Council has several of the trade group’s members delivering payment data. They say that has helped result in over 85,000 originations across lending segments.

In order to release Fannie Mae and Freddie Mac from conservatorship, legislation must be passed to guarantee safety and soundness, the Federal Housing Finance Agency’s annual report to Congress said.

As mortgage originations have declined, those looking to cash in their chips and get out of the game are helping others grow market share, serving to change up the dynamics within the field.