David Spector, the firm’s CEO, touted Pennymac’s technology, consistency and support for the broker channel.

No Whammies in Treasury Borrowing Estimate

Bonds were slightly weaker overnight but quickly moved into stronger territory as volume and liquidity ramped up for the new week. Gains were modest and linear–largely extending the friendly trends seen last Thu/Fri. The only key calendar event was the Treasury refunding estimates this afternoon.  While there are some potentially alarming ways to read the newswires (i.e. “June borrowing estimates up to $514b vs $123b previously”), the large apparent change is due to accounting and not reflective of a $391 bln increase in spending or decrease in revenue. In other words, there were no whammies for the bond market. If anything, it was treated as good news based on yield movement at 3pm ET.

Market Movement Recap

10:21 AM Moderately weaker overnight, but pushing back since 9am ET.  10yr up 1.3bps at 4.25 and MBS down 2 ticks (.06).

01:33 PM Gains continue.  MBS up 1 tick (.03) and 10yr down 1.2bps at 4.225

03:20 PM Favorable reaction to Treasury refunding estimates.  MBS up 2 ticks (.06) and 10yr down 3.0 bps at 4.205

Mortgage rates ended last week at the lowest levels since April 7th.  The average lender remained at those same levels at the start of business today, but many lenders offered modest improvements as the day progressed. Mortgage lenders prefer to update rates only once per day, but they will make mid-day adjustments if the underlying bond market moves enough.  Fortunately, today’s adjustments were toward slightly lower levels. That said, the changes were small enough that the average borrower may not notice any difference versus Friday’s rate quotes. As the week continues, there will be more and more scheduled events with the power to cause intraday volatility and even to impact the longer-term trend. As for that trend, it is arguably flat at the moment after experiencing significant volatility for most of the month of April. 

When getting a sense of what’s happening in the bond market, it’s frequently safe to ignore the last 2 hours of trading on Friday and the first 2 on Monday. When that logic is applied today, we found this morning’s 10am yields precisely in line with Friday’s 3pm levels and MBS doing just a bit better. There was just a bit of additional improvement after the Dallas Fed Survey.

This is the only day of the week without any major data or calendar event in the morning hours. Broader market focus remains on equities and earnings season, but Treasuries get quarterly refunding estimates at 3pm–something that can occasionally have a very noticeable impact.

In its latest financial stability report, the Federal Reserve found that asset prices continue to exceed underlying fundamentals and leverage levels remain high, especially by hedge funds.

The Long Island-based regional bank, which reported another quarterly loss Friday, continues to hire in the commercial-and-industrial lending sphere as it seeks to diversify its commercial real estate-heavy business.

The lender’s parent also said it is actively in preparation to move forward on plans to unlock equity value in 2025, with a Newrez spinoff among its options.

Doug Duncan may be retired from Fannie Mae, but not from the housing market—his new firm is ramping up with writing, speaking, and advisory work.

The way mortgage firms address distressed military borrowers will become less regimented as the Veterans Affairs Servicing Purchase program gets phased out.

Eerily Calm and Strong For 2nd Straight Day

After being heavily conditioned to expect elevated volatility with unpredictable timing, the past two trading sessions have been tremendous departures from the norm. Both days featured linear, reasonably big  improvements without any singular flashpoints that deserve any more credit than a general sense of cooler heads prevailing on the policy-making front. Indeed, when the week ends with Trump saying “we will be reasonable on tariffs” as opposed to doubling down on triple digit brinksmanship, something has certainly changed and both sides of the market are looking relieved. 

Econ Data / Events

Consumer Sentiment (revision/final)

52.2 vs 50.8 f’cast
1yr inflation 6.5 vs 6.7 f’cast
5yr inflation 4.4 vs 4.4 f’cast

Market Movement Recap

09:58 AM Modestly stronger overnight and mostly holding gains so far.  MBS up 5 ticks (.16) and 10yr down 3.8bps at 4.284

02:19 PM Additional gains and near best levels.  MBS up a quarter point and 10yr down 5.6bps at 4.265

04:51 PM Heading out at best levels, MBS up 3/8ths and 10yr down 7bps at 4.25.