Thousands of lenders and vendors braved the gate lice to fly to Denver (the term for people who crowd around the gate at an airport, sometimes in an attempt to board early). Critics of Denver will tell you that it is “Kansas with a view of the mountains.” Heard in the hallways here in Denver… “Guys have it so much easier. One suit, 3 shirts, 3 ties, one pair of shoes. We have to assemble two complete outfits for every day, and I rarely bring less than six pairs of shoes to these events.” “You pointed out a few days ago that this conference center has 2.2 million square feet. I didn’t believe it until now… And that doesn’t even include the surrounding hotels. I need 15 minutes between meetings to get anywhere. I wish they allowed bikes.” “What happened to hotels that have doors in the bathroom?” CFPB Director Rohit Chopra seems to have struck a nerve with Mortgage Musings author and attorney Brian Levy after the phrase, “leeches who only want to pad their billable hours” came up. In his latest Musing, Levy also offers his unique take on the MBA’s new white paper on RESPA Section 8 reform that will be presented today here at the MBA Annual Conference by Levy. (Today’s podcast can be found here, and this week’s is sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Hear an interview with Truv’s Kirill Klokov on how happy customers are the definition of success and how Truv is addressing a need in the industry.)

It’s no mystery that mortgage rates have had a terrible October.  As of last Friday, the average lender’s top tier 30yr fixed rates were up to 6.90–an increase of more than 0.625% this month.  Today’s 0.10% increase brings the rate index up to 7.0% exactly which is the highest we’ve seen since July 10th. The relatively larger size of today’s jump is partly due to the timing of bond market weakness last Friday.  Mortgage rates are based on bonds and mortgage lenders can make mid-day adjustments when bonds move enough during the day.  The later in the day, the more likely it becomes that lenders will wait for the following day to adjust rates. All that having been said, there was definitely new weakness today.  Some of it can be traced to the Treasury auction process.  Election odds are also assumed to be having an impact with the prevailing correlation between higher rates and better odds for a Trump victory. While we should expect the election to continue making for a volatile rate environment, it’s not the only game in town. This week sees the return of highly relevant economic data with Friday’s jobs report being the most important, by far.  Each of the past two jobs reports has had a huge impact on rates due to wide deviations from expectations.  If Friday’s report is anywhere nearly as surprising, the impact on rates should play out on a similar scale.

Bonds Doing What Bonds Do

Another week, another chance for bonds to do the only thing it seems like they know how to do recently: sell off.  It actually didn’t look like a foregone conclusion this morning.  Bonds were only slightly weaker overnight and managed to move into positive territory in the first hour and a half of domestic trading.  After that, the selling was consistent and directional for the rest of the AM hours.  A combination of Treasury auction indigestion and ongoing pre-election positioning can broadly be blamed, but without the normal level of correlation between singular big ticket data releases or news headlines and market movement, we’d take most assessments with a grain of salt when it comes to “what’s moving markets.” 

Market Movement Recap

09:16 AM weaker overnight, but bouncing back early.  MBS up 1 tick (.06) and 10yr down 1.2bps at 4.23

11:05 AM Weakest levels of the day now with MBS down 2 ticks (.06) overall and 5 ticks (.16) from the highs.  10yr up 2.1bps at 4.263

12:30 PM MBS down 7 ticks (.22) and 10yr up 4.7bps at 4.289

02:54 PM Off the weakest levels.  MBS down 5 ticks (.16) and 10yr up 3.3bps at 4.275

After 2 frustrating weeks spent moving toward higher yields without any major justification from the economic data, things are about to change.  From here on out, the move toward higher yields will be justified by the data.  The other option is that yields could actually recover a bit if the data comes in weaker than expected.  Either way, the point is that this week brings the big data (just not on Monday).  Every other day of the week has at least one significant report, with Friday’s jobs report being by far the most important. A strong result could easily push yields even higher while a weak result could force a rethink of at least some of the recent bond market losses.

While not technically economic data, today’s Treasury refunding estimates (due out at 3pm ET) have also been known to make waves in the bond market.  There’s even a chance to see some reaction to the 5yr Treasury auction at 1pm ET. 

The deal will repay investors on a hyrid pro rata, sequential basis. Credit enhancement ranges from 51.7% on the class A1A notes to the 2.25% on the class B2 notes.

The lender and servicer will use proceeds to erase a series of notes due over the next three years.

About 48% of mortgaged residential properties fell into the equity-rich category, slightly down from a peak of 49.2% reported in the quarter prior, per Attom’s report.

A big part of the trouble with the RBC rule is that Ginnie Mae is essentially using its limited legal authority to qualify government issuers to impose sweeping changes on how IMBs operate writes the Chairman of Whalen Global Advisors.

The Florida-based brokerage The Okavage Group is challenging the dismissal of its antitrust suit against UWM, filing an appeal on Oct. 17 in the U.S. Court of Appeals for the Eleventh Circuit.

“A herd of cows broke into a Colorado weed farm. Police and animal control are on the scene, and the steaks are high.” This will be the last day in the office for thousands of people heading to Denver this weekend for the MBA’s Annual Convention and Expo. Printers are churning out schedules, neckties are being picked up at the cleaners, and attendees are coming to the realization that the Denver convention space is 2.2 million square feet. Where’s the Segway concession booth? The conference goes until almost 10/31, and a new survey asked Americans what they were going to wear for Halloween. My 16-month-old granddaughter will be a piggy, but gone are the simple animal or a witch; 44 percent are going as a “fictional person or character” and 19 percent going as “an animal or creature,” fully 16 percent are going as “a concept.” Huh? And for treats being handed out, apples didn’t make the top 10: Reese’s Peanut Butter Cups, Peanut M&M’s, Regular M&M’s, Tootsie Pops… (Today’s podcast can be found here, and this week’s is sponsored 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. After Hear an interview between Robbie and myself on what to look forward to at next week’s MBA Annual.) Lender and Broker Software, Services, and Products