Borrowers still sought opportunities in the homebuilder market with activity trending upward for over a year, even as existing inventory showed signs of expanding.

Consumer Financial Protection Bureau Director Rohit Chopra touted the bureau’s work on data privacy and open banking, and asked that lawmakers on both sides of the aisle pursue legislation to further consumer protections.

Newrez wants all three of OneTrust’s claims to be dismissed.

President Joe Biden also nominated fellow Commodity Futures Trade Commission board member Kristin Johnson to a top bank regulatory post at the Treasury Department.

Helpful Data, MBS Underperformance, Is This Time Different?

The bond market reacted favorably to this morning’s economic data which consisted of sharply lower producer prices at the core level and sharply higher jobless claims.  But based on the next few hours, traders might say the initial move was an overreaction.  It wasn’t until the 30yr bond auction that Treasury yields were able to break to new lows for the day.  MBS, however, never made that quantum leap for reasons we ponder in today’s recap video.  One of the reasons has to do with the chance that “things are changing” in terms of broad rate momentum, but we can’t really know if this time is different until several months of data confirm the story that’s currently only 2 days old. 

Econ Data / Events

Month over month core PPI

0.0 vs 0.3 f’cast, 0.5 prev

Year over year core PPI

2.3 vs 2.4 f’cast, 2.4 prev

Jobless Claims

242k vs 225k f’cast, 229k prev

Market Movement Recap

09:18 AM modestly stronger overnight with additional gains after data.  MBS up 7 ticks (.22) and 10yr down 4.2bps at 4.276

10:59 AM Slowly losing ground after initial data-driven rally.  MBS still up 5 ticks (.16) and 10yr still down 4.1bps at 4.278.

11:46 AM Bouncing back a bit now.  10yr down 6.4bps at 4.256.  MBS up nearly a quarter point.

01:05 PM Best levels of the day after 30yr bond auction.  10yr down 9.5bps at 4.224.  MBS up 10 ticks (.31).

03:11 PM Sideways in the PM for MBS, still up 10 ticks in 5.5 coupons.  10yr broadly sideways, currently down 8bps at 4.239

This morning I head to Chicago, IL, a state with 972 licensed mortgage banking companies. Illinois has had its share of severe storm damage (heck, in Sarasota we just had upwards of 10 inches of rain in about 12 hours), and may be joining the ranks of places in the U.S. where the cost of insurance passes the cost of property tax. Coach a borrower through that! The cost and availability of homeowner’s insurance is a big topic in Florida, as is the PACE program. Florida is one of three states (with California and Missouri) that offer this loan program for clean energy. The Florida legislature put some consumer protection provisions into the program, but for various reasons mortgage organizations like the MBAF were sorry to see the bill pass and are working on a veto. For instance, these loans are put into first priority ahead of the homeowner’s mortgage (no one wants to read “predatory” when it comes to any program), and what lender or servicer needs that? (Today’s podcast is found here, and this week’s are sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, cybersecurity, technology, and other services to the mortgage industry. Hear an interview with Richey May’s Michael Nougier on best practices for companies to put in place regarding preventing and reporting cybersecurity breaches.) Software, Products, and Services for Lenders and Brokers Interest rates are now double where they were in 2022. Tipping over 8 percent at the end of 2023 and hanging in the 7 percent range nearly all of this year, the current interest rate environment is not helping delinquent homeowners. Gone are the days when modifying your mortgage payment was supported by dropping the interest rate. There is a solution. FHA’s Payment Supplement program doesn’t change the terms of the first mortgage. Read Clarifire’s recent blog, “Servicing Answers to High Interest Rate Pressures,” to find out the details of this solution, along with how old pitfalls could impact your implementation of this program and future loss mitigation options. Don’t let old automation cripple your success. Make sure you’re in a position to help your distressed borrowers navigate economic volatility and avoid default with CLARIFIRE ®, a modern, intelligent innovation that’s truly BRIGHTER AUTOMATION®.

You’d have to go back to March 28th to see the average mortgage lender offering a lower rate on a top tier, conventional 30yr fixed scenario than they’re offering today.  The same was technically true yesterday and today’s rates were just a hair lower. That said, some lenders have done things differently over the past 24 hours due to yesterday afternoon’s market volatility.  Bonds lost enough ground after the Fed announcement for some lenders to reissue rates at slightly higher levels.  Those lenders were noticeably improved this morning, but not much better than yesterday morning’s levels. Today’s helpful data included another friendly reading on inflation–this time at the wholesale level as opposed to yesterday’s consumer-level report.  In addition, Jobless Claims rose to the highest levels since last summer.  Weak economic data is generally good for rates, but the claims data raised questions about seasonal distortions.  This is the same timing as last year’s uptick in claims, which suggests the seasonal adjustment factors might not be perfectly dialed in for an evolving labor market. For this and several other reason, the bond market will be reluctant to push rates lower at a fast pace until traders can be sure the data is confirming a bona fide economic shift in addition to a high likelihood of a return to 2% annual inflation at the core level.

In a nutshell, this morning’s economic data rapidly reversed the weakness seen after yesterday’s Fed announcement, thus restoring the lowest yields achieved after yesterday’s CPI data.  Today’s core monthly PPI is probably the bigger consideration, coming in at 0.0 vs 0.3–a big beat to be sure.  Jobless Claims in the 240k+ zone also help, but there are some doubts as to the seasonal adjustment factors due to the way unadjusted data has bled through to adjusted data over the past two years. 
Specifically, the big spike/drop in July/Aug is something that shows up in NON-Adjusted numbers, but is also showing up in adjusted numbers as seen below.  This suggests the adjustments need adjusting and could be overstating the spike seen in claims today (emphasis on “COULD”).

Perhaps those doubts play a role in the bond market having second thoughts about the pace of this morning’s rally.  Either way, yields look to have hit a solid floor when attempting to improve on yesterday’s best levels.

The new Optimal Blue CEO worked for the past year-plus at Medallia, and will bring that broader experience to the mortgage industry as it adopts generative AI.

But despite increasing anxiety over rising costs, an overall majority of consumers also express optimism about their own improving financial prospects in the upcoming year, according to Transunion.