Up until last Friday, 10yr yields closed at 4.17% for 5 days in a row. While that’s technically “resistance,” we’re not complaining considering that’s more than 30bps below the highs from 2 weeks earlier. In fact, it’s probably better for rates to consolidate here as traders wait for auctions and CPI data in the week ahead. With that in mind, last Friday threw a bit of a curveball with a small but noticeable break to even lower yields.  Now at the start of the new week, bonds have moved quickly back to the familiar consolidation range marked by a floor of 4.17. Meaningful improvement from here will require concrete motivation from this week’s CPI/PPI.  Auctions can play a supporting role, to some extent. 

“Wi-Fi outages are the new snow days!” Without the internet or cable, would we return to relying on newspapers, radios, and network channels for news? News has certainly spread that Senate Amendment 2358, aimed at cutting back abusive mortgage trigger leads, was unfortunately deleted yesterday from the NDAA FY 2025. (It was attached to the National Defense Authorization Act.) For a while it was an expectation, just as the Fed’s next move is an expectation… but a Fed cut is priced into the market. Your clients should know that if the Federal Open Market Committee actually does reduce the overnight federal funds rate by 25 bps at its upcoming meeting on December 17–18, it is likely that mortgage rates won’t move. But the good news is that economists do not think the labor market is positioned to be a source of inflationary pressure headed into 2025. (Today’s podcast can be found here and this week’s podcasts are sponsored by Bundle, the attorney-prepared legal documents company that is dedicated to the real estate, mortgage, and title industry. Save 20 percent all week with the code “Chrisman.” Hear an interview with Optimal Blue’s Jim Glennon on what his hedging clients are paying attention to as we close out 2024 and move into 2025.) Lender and Broker Software, Services, and Products Is your LOS investment averaging a 5:1 return? To combat today’s tight margins and high operating costs, lenders are focusing on new ways to drive efficiency and profitability. ICE recently partnered with independent market research firm MarketWise Advisors, LLC to evaluate the financial impact of the Encompass® platform on its clients. Download the full summary of their comprehensive study to explore the significant ROI and cost-saving benefits the platform provides.

Mortgage rates ended last week with an impressive drop to the lowest levels in more than a month and a half.  Today’s rates ended up being the 2nd lowest over that time after the average lender moved to just slightly higher levels to start the new new week.  Top tier conventional 30yr fixed rates spent most of November over 7% but fell back into the high 6% range by the end of the month. Our rate index fell from 6.84 to 6.68 on Friday and moved up to 6.72 today.  Economic data is the key motivating factor for rate movement, in general, but there were no major economic reports today. Instead, we could say that investors are simply choosing to reinforce a range in the bond market (bonds dictate rates) as they wait for the week’s most relevant data. In terms of economic reports, Wednesday’s Consumer Price Index (CPI) has the most potential to cause volatility, for better or worse.

Inconsequential Weakness

Bonds lost a moderate amount of ground on Monday with 10yr yields moving back above the levels seen before last Friday’s jobs report.  MBS  didn’t lose quite as much ground thanks to their higher correlation with shorter-dated Treasuries these days.  There were no significant economic reports and it was the lowest volume day of the year so far–a stunning reality considering that honor would usually go to the Friday after Thanksgiving. In addition to the low volume qualifier, today’s weakness is inconsequential simply because it keeps bonds right in line with the flat-line in yields seen over the past 6 trading days.  If anything, Friday was the outlier there and today is just another day with 10yr yields near 4.20. It’s also just another day where bonds are grinding sideways as they wait for bigger inspiration. 

Econ Data / Events

Wholesale Inventories

0.2 vs 0.2 f’cast, -0.2 prev

Market Movement Recap

10:04 AM Initially stronger overnight, then weaker in Europe and in early domestic session.  MBS down almost an eighth.  10yr up 3.6 bps at 4.191

01:51 PM Unchanged from previous levels in MBS.  10yr now up only 3.3bps at 4.187

04:19 PM Weakest levels now with MBS down 6 ticks on the day and 10yr up 4.2bps at 4.196

The share of underwater mortgages also grew for the first time in almost two years during the third quarter, Corelogic found.

Delinquent borrowers in areas hit by Hurricanes Helene and Milton will get a few additional months to find solutions before servicers can resume legal actions.

The wholesale lender introduced two new products to brokers and a $800 million debt offering to drum up cash.

The Financial Stability Oversight Council’s annual report underscores mounting challenges in commercial real estate, escalating cyber threats, and regulatory gaps in third-party services and stablecoins, urging stronger oversight and legislative action.

Plaintiffs have so far failed to prove the government-sponsored enterprise authorized the $25 expedited payoff quote in question, the magistrate ruled.

“Today’s three-year-olds can switch on laptops and open their favorite apps. When I was three, I ate mud.” Times change. Remember when homeowner’s insurance was an after-thought? In some counties and states, being approved for insurance has become as big a concern as being approved for a loan. “Nonadmitted” insurance is becoming the new norm in many places that face untenable economics when it comes to insuring houses, like coastal Florida or wildfire-prone California. Essentially, insurance tends to be a heavily regulated field, with governments ensuring that insurers have enough money to compensate those they insure, that they’re maintaining high-quality business practices, and that price hikes are limited year to year. When those insurers won’t touch an owner, perhaps they can go to a state-backed insurer, but when even those go out of reach, nonadmitted insurance is there. They have none of the protections or backing of the government and existed at first to insure the comically uninsurable, like nuclear waste projects or fireworks factories. Nonadmitted premiums rose 27.5 percent from 2022 to 2023, compared to 13.8 percent among the admitted market. The number of nonadmitted policies in Florida rose 73 percent to hit 92,000 over the past 14 years. (Today’s podcast can be found here and Richey May is sponsoring this week’s. Richey May’s consulting, cybersecurity, business intelligence, and automation services are designed by mortgage experts to help you continue to drive growth and increase profitability. Hear an Interview with Richey May’s Michael Nouguier on cybersecurity to thwart holiday attacks and best practices as we enter 2025.)