The agency had intended to block access to tax data by most lenders on June 30 as part of a policy change that sought to protect taxpayer privacy. But drew broad opposition from the financial services industry.

Company executives are counting on Guild’s recent acquisitions to buoy business once the market normalizes.

The lender and servicer is still in the red but trimmed its expenses, and overall losses, significantly in 2023.

Voters approved Proposition C, which offers a tax break for developers to convert up to 5 million square feet of commercial space by 2030.

Volatility After CPI, But Only Moderate Weakness

Heading into the 4pm hour, MBS are only down 6 ticks (.19) and 10yr yields are only up 6bps, trading just under 4.16.  That means the bond market is hanging on to all of the gains seen from the recent highs through last Tuesday–not a bad showing considering Core CPI came in a 0.4% for the 2nd month in a row (or that 10yr yields shot up to 4.3+ when that previous CPI report came out).  In addition to rounding considerations (0.4 was really only 0.358), the details also showed a welcome drop in the problematic OER from 0.6 to 0.4.  These factors helped bonds temporarily break even earlier this morning.  Subsequent weakness was at least partially attributable to the approaching 10yr Treasury auction.  

Econ Data / Events

Core CPI m/m

0.4 vs 0.3 f’cast, 0.4 prev

Core y/y CPI

3.8 vs 3.7 f’cast, 3.9 prev

Market Movement Recap

08:48 AM paradoxical reaction to CPI with 10yr down 0.4bps at 4.094.  MBS up 3 ticks (.09)

09:35 AM Giving up the gains fairly convincingly now with 10yr up 4.9bps at 4.147 and MBS down 5 ticks (.16).

01:06 PM Weakest levels after the auction.   10yr up 7.2bps at 4.17.  MBS down a quarter point.

03:47 PM Off the weakest levels and trading sideways after hours.  MBS down 6 ticks (.19) and 10yr up 6bps at 4.157.

Today brought the release of one of the most consequential economic reports that comes out on any given month: the Consumer Price Index (CPI).  CPI measures inflation and inflation is a big deal for interest rates.  Higher inflation means higher rates and vice versa.  That correlation held true today with CPI coming in higher than expected and mortgage rates moving higher, but the details are more nuanced. The last time CPI came out (February 13), the most important line item (core month over month CPI) was at the same level as today’s report.  The impact on 30yr mortgage rates at the time was a big jump of 0.17% for the average lender.  Today’s increase was only 0.05%, and it didn’t even bring rates up to levels seen BEFORE last month’s big jump. That all adds up to a very nice silver lining for an otherwise downbeat day.  It suggests the market is starting to see more convincing signs that inflation and the economy stand a better chance deliver rate-friendly news in the near future as opposed to news that would cause a big resurgence. But why was today’s outcome so much better?  There were some mitigating factors in today’s CPI that weren’t present last time.  Most importantly, the largest and most stubborn component of that core month over month number managed to drop back into its prevailing range (last month’s reading represented a spike to the highest level in nearly a year–something that caused investors to worry about new upward momentum in inflation).

“I heard that 80 percent of car accidents occur within one mile of a person’s residence, so I moved.” But it turns out that moving doesn’t improve your driving, although it does improve lender’s volumes. Home Bay just published a survey that found 75 percent were happy with their decision to move. But 86 percent of Americans who moved in 2023 have regrets about moving, up from 75 percent in 2022. With many movers charging by size and weight, 24 percent of Americans wish they downsized their belongings before moving. Other common regrets include missing their old home (24 percent) and that moving was too expensive (20 percent). What’s more, nearly half (46 percent) of Americans shed tears and 42 percent fought with their loved ones during the moving process. The top reasons for moving in 2023 were to improve their quality of life (31 percent) and upsize their home (21 percent). If money were no object, the states Americans most want to move to are California (32 percent), New York (29 percent), and Florida (24 percent). However, migration data from Allied Van Lines shows more affordable states such as Montana, Vermont, Arkansas, and Idaho have the highest percentage of inbound moves. (Found here, this week’s podcast is sponsored by Lender Toolkit. With Lender Toolkit’s AI-powered AI Underwriter and Prism borrower income automation tools, you’ll be able to get loans approved in under two minutes. Hear an interview with Lender Price’s Dawar Alimi on specific ways that lenders are benefiting from seamless integrations.)

It’s been a weird morning so far with core CPI coming in at 0.4 vs 0.3 forecast–something that should have certainly sent bonds scrambling into weaker territory–only for bonds to rally after a few brief moments of selling.  This paradoxical result could have only been due to a few “yeah buts” in the underlying data.  Likely suspects include the drop in the closely watched shelter component (0.4 vs 0.6 previously), an even bigger drop in the even more stubborn medical services, and the simple fact that the 0.4% core reading was rounded from 0.358, so we were very close to a 0.3 reading after rounding.
If we had to pick one, it would be the main driver of shelter inflation: owner’s equivalent rent (OER), which spiked disconcertingly to 0.6 last month.  This made it look like a calming trend was at risk of being derailed while today’s data suggests last month may have been a one-off.

But let’s not spend too much time explaining the positive bounce back considering it’s already been erased.  Perhaps this is just traders trading it out or the market moving on from reacting to CPI and focusing instead on building in a concession for today’s 10yr Treasury auction. 

Either way, things could have been a lot worse if the composition of the data was less promising. 

The Mortgage Bankers Association would like Fannie Mae to move toward the fee-based structure Freddie is testing.

While some said the agency was ignorant of its own rules, one trade group praised the goals of the posting.