Today saw the average conventional 30yr fixed rate rise ever so slightly for top tier scenarios.  Most lenders are still quoting those scenarios just under 7%.  Depending on the specific details of any given scenario, rates range from the mid 6’s all the way up to the mid 7’s.  Unlike each of the past two days, there weren’t any major flashpoints for the bonds that underlie mortgage rate movement today.  There were a few economic reports, but neither had a big impact on the market.  All in all: a very calm and boring day–especially compared to almost any other day since last Friday. From here, the market will wait for the next big ticket economic report: Tuesday’s Retail Sales.  There are a smattering of other reports next week, punctuated by a holiday closure on Wednesday for Juneteenth. The biggest, most significant movement likely still depends on the economic reports that we just saw and won’t see again for nearly a month.  It wouldn’t be a surprise to see a more sideways, slightly choppy trend between now and then.

The bond market has a lot on its mind after this past week of economic data and events.  Inflation quickly and increasingly looks like it may (finally) be turning the long-hoped-for corner.  Timely employment metrics raise questions about labor market softening and Fed speakers are so eager to avoid jumping the gun on rate cuts after the Q1 inflation surprise that traders may wonder if they’ve moved from one side of the center to the other. 
Nothing about today will change or inform any of that, it seems.  We might have hoped that Import Prices would add to the disinflationary vibes, but alas, bonds actually lost ground after that (though not necessarily because of it.  After Consumer Sentiment data also failed to inspire, it’s clear that bonds are checked out for the week and the trades coming in are occurring for reasons that are unrelated to today’s events.

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From updates in mortgage-related court cases, to developments in AI and policy, here are the most-read stories from National Mortgage News over the past week.

Borrowers still sought opportunities in the homebuilder market with activity trending upward for over a year, even as existing inventory showed signs of expanding.

Newrez wants all three of OneTrust’s claims to be dismissed.

Consumer Financial Protection Bureau Director Rohit Chopra touted the bureau’s work on data privacy and open banking, and asked that lawmakers on both sides of the aisle pursue legislation to further consumer protections.

President Joe Biden also nominated fellow Commodity Futures Trade Commission board member Kristin Johnson to a top bank regulatory post at the Treasury Department.

Helpful Data, MBS Underperformance, Is This Time Different?

The bond market reacted favorably to this morning’s economic data which consisted of sharply lower producer prices at the core level and sharply higher jobless claims.  But based on the next few hours, traders might say the initial move was an overreaction.  It wasn’t until the 30yr bond auction that Treasury yields were able to break to new lows for the day.  MBS, however, never made that quantum leap for reasons we ponder in today’s recap video.  One of the reasons has to do with the chance that “things are changing” in terms of broad rate momentum, but we can’t really know if this time is different until several months of data confirm the story that’s currently only 2 days old. 

Econ Data / Events

Month over month core PPI

0.0 vs 0.3 f’cast, 0.5 prev

Year over year core PPI

2.3 vs 2.4 f’cast, 2.4 prev

Jobless Claims

242k vs 225k f’cast, 229k prev

Market Movement Recap

09:18 AM modestly stronger overnight with additional gains after data.  MBS up 7 ticks (.22) and 10yr down 4.2bps at 4.276

10:59 AM Slowly losing ground after initial data-driven rally.  MBS still up 5 ticks (.16) and 10yr still down 4.1bps at 4.278.

11:46 AM Bouncing back a bit now.  10yr down 6.4bps at 4.256.  MBS up nearly a quarter point.

01:05 PM Best levels of the day after 30yr bond auction.  10yr down 9.5bps at 4.224.  MBS up 10 ticks (.31).

03:11 PM Sideways in the PM for MBS, still up 10 ticks in 5.5 coupons.  10yr broadly sideways, currently down 8bps at 4.239

You’d have to go back to March 28th to see the average mortgage lender offering a lower rate on a top tier, conventional 30yr fixed scenario than they’re offering today.  The same was technically true yesterday and today’s rates were just a hair lower. That said, some lenders have done things differently over the past 24 hours due to yesterday afternoon’s market volatility.  Bonds lost enough ground after the Fed announcement for some lenders to reissue rates at slightly higher levels.  Those lenders were noticeably improved this morning, but not much better than yesterday morning’s levels. Today’s helpful data included another friendly reading on inflation–this time at the wholesale level as opposed to yesterday’s consumer-level report.  In addition, Jobless Claims rose to the highest levels since last summer.  Weak economic data is generally good for rates, but the claims data raised questions about seasonal distortions.  This is the same timing as last year’s uptick in claims, which suggests the seasonal adjustment factors might not be perfectly dialed in for an evolving labor market. For this and several other reason, the bond market will be reluctant to push rates lower at a fast pace until traders can be sure the data is confirming a bona fide economic shift in addition to a high likelihood of a return to 2% annual inflation at the core level.