While there will certainly be some excitement at some point in the future (possibly even the near future), and while we are already well acquainted with exciting times in the past, there are occasionally unavoidable dead zones in the volatility landscape.  We’re in one now.  There are no relevant economic reports on tap and no significant headline market movers.  Serendipitously, bonds are slightly stronger than yesterday, but when 11 out of the last 12 trading days have failed to move outside the range set on a single day (NFP Friday, Aug 2nd), gains and losses are an illusion.

Sometimes things are confused with other things. (What do racoons think of Tesla trucks? Those trucks are easy to make fun of.) There isn’t a lot of confusion among the 700+ people attending the Western Secondary here near Los Angeles: stay in business, help consumers, and achieve the best execution in the secondary markets to help LOs and AEs. Part of that is keeping up on regulations, and today at 3PM ET is a free 45 minute webinar: “Regulation Central”, sponsored by Polunsky Beitel Green and featuring attorneys Peter Idziak and Brian Levy, with AHMC President Matt VanFossen. Of course, interest rates factor into things. The consensus among “those in the know” here at the conference is that, although the Federal Reserve’s Open Market Committee will start reducing overnight fed funds next month, most or all of this is already priced into the bond market, and therefore rates. So, if you like mortgage rates where they are, good, as they may be around these levels for a few more months. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a Warranty, eliminating repurchase worries. Hear an Interview with MBA’s Sasha Hewlett on capital markets prerogatives and what the MBA is watching in the secondary markets.) Lender and Broker Software, Services, and Products Down Payment Resource (DPR) is a company on a roll! Fresh off a strong showing of its Encompass® LOS integration at CMBA Western Secondary, EVP of Product and Operations Sean Moss and VP of Sales and Business Development Brad Cardwell head to Denver next month for TMC’s “A Mile Above.” A fitting next stop for a company going a mile beyond to help loan officers using Encompass dynamically view available down payment assistance (DPA) programs for borrowers based on their location, occupation, income, and other factors. Using a different LOS platform? That’s fine too. DPR’s software solutions can connect lenders of any size or stripe to its massive and national 2,400+ program database. Keep those doggies rolling! Catch up with Sean and Brad at TMC or grab a spot on Brad’s calendar any time to get a demo of DPR’s lender suite.

Four companies are fighting CFPB enforcement actions by claiming the agency cannot be funded by the Federal Reserve, which has not been profitable since 2022. The consumer bureau calls the new legal theory “meritless.”

Among the big four title companies, the top two reported fewer open orders year-over-year in the second quarter, while the other two gained business.

Wall Street strategists are recommending taking advantage of declines in market-based gauges of future inflation to build up protection on the cheap.

Capacity reductions seem to be in their endgame as clients are looking to focus on revenue growth and market share, Boston Consulting Group said in its second quarter 2024 wrap.

The possibility of moving stalled housing bills forward combined with promises of down payment assistance is offering hope to housing advocates.

After the intense volatility seen earlier in August, the average change for mortgage rates on any given day has been shrinking. Last week was a mere shadow of the former week which, in turn, was nowhere close to the week before that. If Monday is any indication, the present week will attempt to keep that trend going.  The average lender offered slightly lower rates compared to Friday’s latest levels, but that has just as much to do with bond market strength on Friday (which wasn’t early enough or big enough to result in widespread rate improvements. Top tier conventional 30yr fixed rates continue near the 6.5% mark.  In terms of scheduled events, there are no major volatility risks until the end of the week.

Uneventful Summertime Monday

Monday started slow and stayed slow throughout.  MBS held well within the narrowed intraday trading range in nearly a month in addition to hitting the 3pm bell at exactly the same levels seen at 8am. There were no relevant economic reports or market movers.  Treasury volumes were right in line with the lowest levels of any day in the past month.

Econ Data / Events

Leading Indicators

-0.6 vs -0.3 f’cast, -0.2 prev

Market Movement Recap

10:17 AM Stronger overnight the weaker at 9am with EU bond auctions.  10yr up half a bp at 3.885. MBS down 1 tick (.03).

01:16 PM Sideways near best levels.  MBS up 1 tick (.03).  10yr down 2.2bps at 3.86

In past examples of imminent shifts in Fed policy, the late August Jackson Hole symposium has been a relevant–and sometimes substantial–market mover.  That impulse has faded in recent years amid the Fed’s aggressive transparency efforts, but exceptions can’t be ruled out depending on the circumstances.  This year’s installment raises some questions.  In the days following Powell’s last appearance, the bond market briefly traded rate cut probabilities into the 75bp range for the September Fed meeting before rapidly shifting back to a 25bp expectation.

We’ve had compelling data on both sides of the argument with distinct differences between inflation and labor market indicators.  With the first rate cut seen as a virtual certainty next month, markets still expect more overt foreshadowing from Powell.  The only question is whether or not traders will be disappointed when Powell keeps his options open this Friday.  After all, there’s another jobs report and CPI left to come before he needs to decide.