The Federal Reserve chair said Fed researchers continue to explore central bank digital currencies to stay current on international payments developments, but emphatically denied that the central bank is considering creating one of its own.

Titles can vary among competitors, but the leaders of loan officers all value experience in both sales scenarios and technology acumen.

The parent company of Newrez saw mortgage segment profits of over $200 million and the successful close of its merger with Specialized Loan Servicing in the second quarter.

While the REIT still seeks to grow servicing, it’s been willing to sell for the right price as it responds to new rate-related risks and opportunities.

The Fed didn’t cut rates today and rates then moved quickly lower.  Naturally, there’s more to the story than that, but the paradox is a good reminder that the market reacts in real time to things that won’t happen for months.   Specifically, the Fed’s next meeting isn’t until September, but a good amount of today’s rate drop can be tied to expectations for future rate cuts.  In fact, it’s really the meetings beyond September that mattered more today (Sept itself was already seen as a near certainty). What drove the shift in sentiment?  It’s not necessarily the case that sentiment shifted in a major way.  Investors may simply have been cautious about the Fed pushing back on the exuberant certainty surrounding the rate cut outlook for the rest of the year. Fed Chair Powell absolutely knew the market was pricing in a 100% chance of a rate cut in September and while he certainly stopped well short of saying it was flat-out “likely,” he did nothing to push back on those expectations. There were other market movers in play in the afternoon as well.  These included geopolitical headlines and the typical elevated trading activity associated with the final day of any given month.  That month-end trading environment has often resulted in volatility with no other justification beyond the calendar.  Either way, it was one of the stronger days of the year for bonds, thus allowing mortgage lenders to drop rates by a larger than normal amount. Not every lender will be reflecting the improvement until and unless the market maintains the gains through tomorrow morning. 

Surprisingly Strong Reaction to Equivocal Powell

Opinions certainly vary as to whether today’s communications from the Fed and Fed Chair Powell were dovish or hawkish, so let’s focus on facts.  The changes in the statement itself were bond-friendly but not enough for bonds to rally.  In fact, there was modest selling until Powell began answering questions.  Powell himself said a September rate cut was one possible scenario assuming the data remains consistent with recent progress toward goals.  He was very clear, however, to say that no decisions have been made.  A strong case can be made that today’s rally isn’t exclusively on Powell.  Geopolitical headlines and month-end trading definitely had an impact.  Still, history will remember that Powell did everything he could do to leave the door open for a September cut, short of promising that it would happen.

Econ Data / Events

ADP Employment

122k vs 150k f’cast, 155k prev

Employment Cost Index

0.9 vs 1.0 f’cast, 1.2 prev

Chicago PMI

45.3 vs 45.0 f’cast, 47.4 prev

Pending Home Sales

+4.8 vs +1.5 f’cast

Market Movement Recap

08:17 AM Flat overnight and a hair stronger after ADP.  MBS up 1 tick (.03) and 10yr down 1bp at 4.126.

12:27 PM Best levels of the day for MBS, up 5 ticks (.16).  10yr down 3.4bps at 4.101.

02:10 PM Slightly weaker after Fed announcement.  MBS still up 2 ticks (.06) and 10yr still down 1bp at 4.125

03:26 PM Stronger after press conference.  MBS up a quarter point.  10yr down 5.7bps at 4.079

05:00 PM Strongest levels of the day at the close.  MBS up 3/8ths and 10yr down 10.5bps at 4.031.

Michigan-based University Bancorp is paying $30 million for a 50.5% stake in a business Voxtur acquired for $101 million in 2022.

Higher interest rates over the spring applied some downward pressure on prices, which still managed to grow by over 4% in the first five months of the year, according to the S&P CoreLogic Case-Shiller Index.

A measure of expectations for the next six months climbed to 78.2 in July, the highest since January.

Changes to the regulatory regime surrounding the Federal Home Loan banks should be carefully calibrated so as to do no damage to their successful support for housing and the provision of liquidity to members.