The administration is pitching a $26.7 billion reduction to the regulator’s funding for rental assistance, public housing and elderly and disability housing.

Data Dependence is Back, But Not in A Fun Way

Bonds definitely paused their long term relationship with economic data in wake of the tariff announcement in early April, which was logical given the headline-drive volatility and uncertainty. 2 weeks ago, the connection looked to be returning.  Now over the past 2 days, it’s back with a vengeance.  It’s not that any of the data has been stunningly strong, but it’s been much better than what some market participants were prepared to see.  Friday’s jobs report is the 2nd time in 2 days where traders have been able (or forced?) to reconcile their more dire fears with a less dire reality. Translation: higher stocks, higher yields.  More big ticket data on the way on Monday…

Econ Data / Events

Nonfarm Payrolls

177k vs 130k f’cast, 185k prev
last month revised down from 228

Unemployment Rate

4.2 vs 4.2 f’cast, 4.2 prev

Participation rate 

up 0.1% (bad for bonds)

Market Movement Recap

08:36 AM Losing some ground after jobs report.  MBS down about an eighth and 10yr up 5.5bps at 4.271

11:31 AM More selling.  MBS down just over a quarter point and 10yr up 8.8bps at 4.305

12:06 PM More weakness.  10yr up 10.6 bps at 4.323.  MBS down 9 ticks (.28).

03:57 PM Off the weakest levels, but still weak.  MBS down a quarter point and 10yr up 9.3bps at 4.31

The company reported a profitable first quarter and called for loosened regulation to bring more private capital into home finance in its latest earnings call.

In a recent interview, Bill Pulte claimed he’s signed 80 orders for the agency, although only a dozen have been made public via his social media feed.

A government-sponsored enterprise executive shared his take on the financial implications of Federal Housing Finance Agency Director Bill Pulte’s initiatives.

Pricing on the 30-year fixed rate mortgage retreated this week as investors digested some economic news, including a GDP contraction in the first quarter.

ICE Mortgage Technology also added 20 new Encompass clients in the first quarter, but the unit still had an operating loss for the period, its 10th in a row.

Bonds Brace For More Data-Driven Volatility

Today’s ISM Manufacturing data played the role of coalmine canary today, and although it’s not the most vigorous canary anyone’s ever seen, it also wasn’t dead. That wasn’t good for bonds today as ISM is viewed as a good early indicator at times when the market is waiting for a certain shoe to drop (in this case, tariff/policy/uncertainty impact on econ data). ISM is also often heavily traded due to its proximity to the big jobs report (in this case, the following morning). If nothing else, the market’s willingness to react to economic data once again is fully confirmed.

Econ Data / Events

Jobless Claims

241k vs 224k f’cast, 223k prev

Continued Claims

1916k vs 1860k f’cast, 1833k prev

ISM Manufacturing PMI

48.7 vs 48.0 f’cast

ISM Prices Paid

69.8 vs 70.3 f’cast, 69.4 prev

Market Movement Recap

08:33 AM MBS up just over an eighth and 10yr yields are down 3.5bps at 4.126 after claims data.

10:23 AM weaker after ISM.  MBS down 2 ticks (.06) and 10yr up 3.6bps at 4.196

12:27 PM MBS now down 6 ticks (.19) and 10yr up 6.7 bps at 4.227.

02:30 PM MBS now down a quarter point and 10yr up 7.7bps at 4.238

2 weeks ago, we got our first hint that the market was once again ready to respond to economic data after a few weeks of tariff headlines being the only game in town.  The hint came from the price data inside the S&P Manufacturing PMI data. It was especially notable at the time because it singlehandedly and quite obviously reversed a nice little morning rally following Trump’s clarification on Powell’s tenure. ISM’s version of PMI is trader’s PMI of choice in the U.S. so today’s release was hotly anticipated. Would it show the same jump seen in the S&P version?  Spoiler alert: no.  But bonds still didn’t like it.  In today’s data, it was the fact that all the other components moved higher and beat expectations. Prices technically moved higher as well, even if not by as much as S&P PMI suggested.

To be clear, apart from yesterday’s month end session, these two PMI reports (S&P 2 weeks ago and now today’s ISM) have given us the biggest volume spikes in Treasury futures of the past several weeks.  

May Day… whether you celebrate today as “about” halfway between the Northern Hemisphere’s Spring equinox and Midsummer solstice associated with maypoles, or a day that commemorates the historic struggles and gains made by workers and the labor movement, mostly associated with communist Russia (which has never been our ally in 80 years), it’s up to you. So, let’s stick with the seasons. As we approach summer, many in the Western U.S. are gearing up for forest fires. Despite the growing threat of them, many Americans continue to move into high-risk areas. A LendingTree study found that 27 of the 29 metros with the highest wildfire risk had more people moving in than out, with Flagstaff, Arizona leading in both in-migration and out-migration, indicating high population turnover. Meanwhile, only Redding, California, and Wenatchee, Washington, experienced net population declines, and metros like Los Angeles and Fresno showed stable populations with modest net gains. With a lack of available homes in certain areas and certain price points, it is understandable: The rental vacancy rate ticked up to 7.1% in the first quarter, according to the Census Bureau. The homeownership rate was flat at 65.1%. (Today’s podcast can be found here and this week is sponsored by CreditXpert, the credit optimization platform that helps today’s top mortgage originators and more than 60,000 mortgage professionals qualify more applicants, make more competitive offers, reduce LLPA premiums and close more loans. Hear an interview with CreditXpert’s Mike Darne on ways lenders and originators can help borrowers improve their credit scores and qualify for more mortgage programs and products.)