Numbers jumped after the expiration of a moratorium at the end of 2024, but rates of foreclosure rose across all loan types, the Mortgage Bankers Association said.

Bonds End Almost Perfectly Flat

There are two kinds of rate/bond watchers today: those who tuned in late in the day to see bonds  almost perfectly unchanged and those who were tuned in through the mild volatility this morning.  The former group would simply shrug and go back to whatever it was they were doing while the latter might be frustrated to see bonds losing ground on a morning where inflation came in lower than expected. For the frustrated crowd, this was the plan for today–the asymmetric risk discussed yesterday.  A decent result was never likely to help bonds.  The subsequent weakness was driven by other factors, not CPI (risk-on trading and a series of tariff headlines from China).  Even then, unchanged is unchanged. 

Econ Data / Events

Monthly Core CPI

0.237 vs 0.3 f’cast, 0.1 prev

Annual Core CPI

2.8 vs 2.8 f’cast, 2.8 prev

Market Movement Recap

08:48 AM MBS up about an eighth and 10yr down 2.4bps at 4.446

09:58 AM Losing ground in the NYSE session.  10yr up 0.4bps at 4.474.  MBS back to unchanged.

12:09 PM New lows.  MBS down 3 ticks (.09) and 10yr up 2.4bps at 4.492

04:49 PM Decent late bounce.  10yr roughly unchanged at 4.47.  MBS down 1 tick (.03) 

Heading into the session, we knew there was a high bar for CPI to have a positive influence on bonds with the future tariff landscape reducing the relevance of current price data, but the results were close enough to consensus that we might not have seen a big reaction anyway. Core CPI rose to 0.237 month over month, versus a 0.3 forecast. Annually, it was 2.8 vs 2.8 and unchanged from last month. Volume spiked modestly and bonds rallied for a few seconds before returning to flat levels. The meaningful movement has taken place after the 9:30am NYSE open with a classic risk-on trade. Friendly tariff headlines from China added to the case just after 10am.

No one in places like Florida or Myrtle Beach or Colorado’s Glenwood Springs wants to wake up to a headline, sensationalist or not, saying, “Vacation homes (about 7 million in the U.S.) are being dumped at a rapid rate as fresh fears of a housing market crash, and a shrinking pool of renters, rattle sellers. “The number of people buying second homes has plunged to its lowest level since records began, and is under a third of what it was during the pandemic boom. A toxic mix of sky-high mortgage rates, soaring maintenance costs, and a widespread return-to-office push is fueling the trend.” Mortgage rates and the economy will certainly be a topic at the upcoming NY conference, as well as today’s Capital Markets Wrap, sponsored by Polly, at 12PM PT where the panelists will analyze the Fed’s recent meeting and its potential impact on market trends. They’ll also discuss the return of focus to economic data amid steadier volatility, changes in tariffs, and how technology is enhancing transparency and efficiency in capital markets. (Today’s podcast can be found here and Sponsored by TRUE and its Mortgage Operations Service (MOS) AI background worker, which transforms borrower documents into instant, trustworthy data for real-time decisioning. TRUE helps lenders accelerate decisions, cut costs, and deliver superior borrower experience, all without a $100M tech budget. Hear an Interview with Servbank’s Luke Jensen on how servicers are leading the way in AI and automation, and revolutionizing customer experience with innovative, loan-level customized correspondence solutions.)

Tuesday brought the release of an economic report that has frequently been responsible for big swings in mortgage rates. The Consumer Price Index (CPI) is the earlier of the two big inflation reports from the US government, and inflation is a big deal for interest rates.  In general, higher inflation coincides with higher rates and vice versa. But today’s CPI data was likely to be taken with a grain of salt due to the to-be-determined impacts of tariffs and trade deals on the price of imported goods and materials. In other words, if inflation came in lower than expected, it wouldn’t matter as much as normal because. The only real risk was that inflation would come in higher than expectations, thus suggesting that any tariff-related impact would be hitting an already elevated price trend. Thankfully, today’s report was slightly lower than expected, even though it moved up from last month’s levels. As expected, that didn’t do anything to help rates. In fact, the average lender is just a hair higher than yesterday owing to market movement that happened later in the day.

All of those surveyed by Wolters Kluwer for its May Blue Chip Economic Indicators report ruled out the possibility the Fed could raise short-term rates.

A 90-day pause on reciprocal tariffs between the U.S. and China boosted the near-term economic outlook for banks, but tensions and uncertainty around trade barriers remain high.

The allegations against New York’s attorney general involve transactions that occurred over decades, but James called the charges political retaliation.

April was a mixed bag for title companies, executives said on earnings calls, but some are expecting a stronger market the rest of the year.

Federal Reserve Gov. Adriana Kugler said in a speech in Dublin that trade barriers could soon affect prices and slow down growth while increasing uncertainty in 2025.