The company originated more loans to buy homes than Detroit-area rival No. 2 Rocket did in total during the fourth quarter.

The U.S. economy expanded at a slightly slower rate at the end of last year as a downward revision to inventories masked stronger household spending and investment.

The automated notices related to potential defects may be helpful because they flag issues earlier, according to the Community Home Lenders of America.

Small Scale Volatility But Very Sideways Overall

There were a few instances of volatility in the bond market today with several of the larger moves lining up with larger doses of volume.  In a “data dependent” world, it’s odd to consider that none of the notable moves had anything to do with economic data.  Instead, it was a surge in corporate bond issuance around 9am causing some selling and the 3pm close causing some buying.  And EVEN THEN, those events added up to a pittance of activity and drama.  Bonds managed to clock modest gains, but that only served to solidify the sideways trend that’s been in place since the Feb 13 CPI data.

Econ Data / Events

Q4 GDP (revision)

3.2 vs 3.3 f’cast

GDP PCE Price Index

2.1 vs 2.0 f’cast

Wholesale Inventories

-09.1 vs 0.1 f’cast, 0.4 prev

Market Movement Recap

08:58 AM Modestly stronger overnight. No reaction to data.  Giving up some gains now.  10yr still down almost 1bp at 4.295.  MBS up 2 ticks (.06).

11:42 AM Little changed from previous update after some initial volatility.  10yr down 1.2bps at 4.291.  MBS up 3 ticks (.09).

03:27 PM Stronger during the 3pm CME close (month-end).  10yr down 3.5bps at 4.268.  MBS up a quarter point in 5.5 coupons and an eighth in 6.0 coupons.

Despite the release of economic data that sounds like it should matter to markets (mainly “GDP”), the bonds that drive interest rates had a remarkably calm day on Wednesday.  This is the latest in a series of mostly remarkably calm days for just over two weeks now. The timing makes sense.  The most recent CPI report (the Consumer Price Index) was released just over two weeks ago and it send rates significantly higher.  Indeed, yesterday’s average conventional 30yr fixed rate matched its highest level in roughly 3 months yesterday, thus making today’s microscopic improvement a rather hollow victory. As for GDP, it’s no surprise to see markets look past that data.  Not only is it too broad to deliver the most needed cues, it also happens to be quite stale.  After all, today’s GDP release is still looking back to Oct-Dec, 2023.  That will STILL be the case when it comes out next month.  In other words, it’s the biggest, most stale report card on the US economy.  The investors who are making the trades that move interest rates are infinitely more focused on things like the big jobs report out next Friday or CPI the following week.

The bond market may be data dependent (it totally is!), but not just any data will do.  You’d be forgiven for thinking that things like “GDP” and “Core PCE Prices” are important enough for the bond market to react.  This is especially confusing due to the fact that one of today’s line items sounds a lot like “Core PCE,” which is indeed one of the Fed’s favorite benchmarks for its inflation target.  We’ll get the more relevant Core PCE tomorrow (even then, it’s not as important as CPI).  Today’s PCE data is part of the GDP data which, itself, is so damn old that it doesn’t even matter anymore (October-December of 2023).  Since we already have almost all the relevant data for January, that’s ancient history and it’s no surprise that markets don’t care.

The “not econ data” pop that followed about 20-30 minutes later was linked to a glut of new corporate bond issuance.  

At the TMBA’s Secondary Conference in Houston a topic is obviously interest rates and the economy… And the fact that the nation’s interest payment expense now exceeds our defense expense! It’s also a fact that Texas’ business climate is very friendly for companies. The #1 state in the nation for residential lending, California, not so much. Overheard here in the hallway: “California is a blue state wrapped up in red tape.” That said, permit process aside, California gets a lot of flak for its high cost of living, but that is for income tax rather than property tax, as exhibited in “Property Taxes by State in 2024” comparing home and vehicle taxes across the nation. Californians pay the 34th highest annual taxes on homes priced at state median value. New Jersey, Illinois, and Connecticut have the highest annual taxes on homes. Each year, the average American household spends $2,869 on real-estate property taxes plus another $448 for residents of the 26 states with vehicle property taxes. (Found here after 8:30AM ET, this week’s podcast is brought to you by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products – nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics – unite the people, systems, and stages of the mortgage process. Interview with SoFi’s Liz Young on the need for Treasury auctions and how supply and demand at those auctions impacts consumer interest rates.) Lender and Broker Services, Products, and Software

The week ending February 23 produced the third consecutive period of declining mortgage activity. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, decreased 5.6 percent on a seasonally adjusted basis from one week earlier and was down 3,0 percent before adjustment.   The Refinance Index declined 7.0 percent from the previous week’s level and was 1.0 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 31.2 percent from 32.6 percent the previous week. [refiappschart] The Purchase Index was down 5.0 percent on a seasonally adjusted basis and 1.0 percent before adjustment. Volume was 12.0 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates were little changed last week, with the 30-year conforming rate declining slightly to 7.04 percent but remaining about a quarter percentage point higher than the start of the year,” said Mike Fratantoni, MBA’s SVP and Chief Economist.  “Higher rates in recent weeks have stalled activity, and last week it dropped more for those seeking FHA and VA refinances. Purchase activity is running 12 percent behind last year’s pace, but our JanuaryBuilder Application Survey results showed that applications to buy new homes were up 19 percent compared to last year. This disparity continues to highlight how the lack of existing inventory is the primary constraint to increases in purchase volume . However, mortgage rates above 7 percent sure don’t help.”

The U.S. Supreme Court appeared skeptical about arguments made by both consumers and Bank of America in a case regarding mortgage escrow accounts but some experts say they appear to favor state rules preempting national regulations.

Wall Street saw another busy session of bond sales as issuers looked to borrow before key economic data later this week.