It’s nearly impossible to avoid hearing the phrase “data dependent” when following financial markets these days and this morning’s movement is the latest reminder.  A mere miss of 0.1 vs 0.2 in Retail Sales has resulted in an immediate and obvious bond market reaction, even if it hasn’t been extreme in terms of the level of improvement. 

It also clearly benefited from a larger downward revision to last month’s reading (-0.2 vs 0.0).  The net effect is a move to the lowest yields of the week, but not as low as those seen last Friday. 

With the 20yr bond auction this afternoon and a market closure tomorrow, it would be a surprise to see traders try to improve on these gains without a surprise of some sort in the news.

Some banks with large commercial real estate concentrations are seeing their stock values take a roller-coaster ride as investors discount their assurances about the wobbly asset class.

The partnership between personal finance platform Esusu and the National Rental Home Council has several of the trade group’s members delivering payment data. They say that has helped result in over 85,000 originations across lending segments.

The HUD agency contends that the bank’s agreements involving certain reverse-mortgage assets call for the closely watched case to be filed there.

As mortgage originations have declined, those looking to cash in their chips and get out of the game are helping others grow market share, serving to change up the dynamics within the field.

In order to release Fannie Mae and Freddie Mac from conservatorship, legislation must be passed to guarantee safety and soundness, the Federal Housing Finance Agency’s annual report to Congress said.

MBS Outperform as Treasuries Give Back Some of Last Week’s Gains

After rallying from roughly 4.45 to 4.22% last week, 10yr Treasuries began the new week with a move up 4.28%.  MBS didn’t lose ground as quickly today, which is what you’d expect after they underperformed for a week as Treasuries rallied somewhat sharply.  It was a boring day in terms of data, events, and volume.  NY Fed Manufacturing didn’t have a discernible impact and traders were unsurprised by updates from Fed’s Harker.  The losses feel like a token correction with effectively no bearing on tomorrow’s directionality.  That majority of that honor goes to Retail Sales, or at least all rights are reserved by Retail Sales.  It would still take a big beat or miss to prompt a logical and meaningful reaction. 

Econ Data / Events

NY Fed Manufacturing

-6 vs -9, -15.6 prev

Market Movement Recap

10:22 AM Weaker overnight and steady selling early.  10yr up 6.6bps at 4.29.  MBS down nearly a quarter point in 5.5 coupons.

01:44 PM Bounce back a bit from weakest levels.  MBS down 6 ticks (.19) and 10yr up 4.8bps at 4.272

04:14 PM Flat all afternoon with both MBS and Treasuries in line with the previous update

This week includes Juneteenth, a reminder of how slow news traveled in the past, as well as the Summer Solstice. Here in Hawai’i, in terms of daylight, the difference between summer and winter solstices is only about 2 ½ hours. (Compare that to 7 ½ hours in Seattle or 6 hours in Boston.) People are already in town for the MBAH yearly conference. With MBA Chairman Mark Jones joining us this year, as at other state and regional events some of the talk is bound to include state legislative and regulatory committee work, the Mortgage Action Alliance and MORPAC, advocacy and lobbying, and the MBA’s state relations committees. At the originator level, no lender operates in a vacuum. Here’s a very handy website for you to research your own company as well as your competitors; Just type in the name of the company at the top. (It’s lacking in niceties but is chockfull of origination data including branch data.) Today’s podcast is found here, and this week’s is Sponsored by Quontic whose mission is to help creditworthy borrowers obtain home loans and give them the “yes” they’ve been waiting for. Hear an interview with Lender Price’s Paul Orlando on the launch of Bulk Price API, new PPE features, and what he’s been working on as it relates to AI. Software, Products, and Services for Lenders and Brokers Attention loan officers! Are you struggling to earn in today’s volatile rate environment? With Figure’s platform, borrowers get cash fast without giving up their existing low-rate mortgages, and you still get paid! Many of the biggest lenders already offer HELOCs through Figure’s platform, so what are you waiting for? The borrower-driven application process is low-touch and fast, with many finishing in as little as 1 day. Borrowers can apply in as few as 5 minutes, verify income and property value online, get autopay and credit union discounts, and in some states, even complete an e-notary, all while getting a lower rate than many of our competitors. When you’re ready to become a Figure Partner, email Anthony Stratis.

Mortgage rates moved modestly higher to start the new week.  With the average top tier 30yr fixed rate just under 7% on Friday, this meant a move to just over 7% today.   As always, keep in mind that a mortgage rate index is best used to capture the day to day  movement in rates as opposed to outright levels.  The latter can vary significantly depending on credit score, equity, occupancy, discount points, and lender margins. There weren’t any interesting or compelling developments driving today’s bond market movement (bonds dictate mortgage rate momentum).  It was an uninspired, uninteresting Monday without any significant economic data or bond market volume.  Things should be more interesting tomorrow, for better or worse, due to the release of the Retail Sales data at 8:30am ET.  While this isn’t in the same league as the jobs report or the Consumer Price Index, when Retail Sales come in much higher or lower than forecast, there’s often a noticeable reaction in rates.

Last week, MBS underperformance was front and center.  One of the justifications was the fact that MBS almost always underperform when Treasuries go on a nice bull run and las week certainly qualified.  The next step in that line of thinking would be to assume MBS outperformance when Treasuries leveled off or corrected.  This morning fits the bill.  10yr yields are up 6bps at 4.286–a move of half a point in terms of 10yr note prices.  5yr notes are down a quarter point in price.  Meanwhile, 6.0 MBS are down only an eighth of a point and 5.5 coupons are down only 7 ticks (.22).  As for the weakness itself, underlying motivations are not jumping off the page.  Volume is very low.  As always, that can grease the skids for random volatility, and a sell-off is the less surprising option after coming off a strong week that began to run out of steam by Friday.