House Financial Services Committee Chair Rep. Patrick McHenry, R-N.C., told Federal Deposit Insurance Corp. Chairman Martin Gruenberg to make himself available for a June 12 hearing on the agency’s workplace culture.

The 11-Day Weekend is Now Official

If there was one objective hurdle to clear in order to consider the present week completely uneventful in terms of big picture rate momentum, it would have been that the 10yr Treasury yield hold inside the 4.34 – 4.50 range.  Thanks to today’s friendly revision in consumer inflation expectations, the hurdle was cleared without a millimeter to spare.  With that, these business days plus the adjacent weekend days add up to 11 uneventful days for the bond market. Next week isn’t much better in terms of big ticket data, but Friday’s PCE price index is a notable exception.  

Econ Data / Events

Durable Goods

0.7 vs -0.8 f’cast
last month revised to 0.8 from 2.6

Consumer Sentiment, final

69.1 vs 67.5 f’cast

1yr inflation expectations

3.3 vs 3.5 f’cast

5yr inflation expectations

3.0 vs 3.1 f’cast

Market Movement Recap

10:07 AM Buyers held out until the safe read on consumer inflation expectations.  Now turning green with 10yr down 0.2bps at 4.474 and MBS unchanged (up an eighth from lows).

12:47 PM Steady at modestly stronger levels.  MBS up 2 ticks (.06) and 10yr down .6bps at 4.47

02:50 PM Early close has come and gone without any major changes to mid-day prices seen in the last update.

Companies are seeing evidence of income falsification, which previous research shows is the most common type of fraud or defect risk.

Former Federal Housing Finance Agency Director Mark Calabria may return, but analysts told an industry meeting someone else is more likely in line for the role.

A Connecticut judge gave preliminary approval of a $2.42 million settlement between the plaintiffs and Planet Home Lending. Plaintiffs could receive up to $2,000 from the settlement fund.

Test your knowledge of the biggest mortgage headlines, from overtime lawsuits to data breaches. No. 2 pencil not required!

All lenders experiencing system breaches must report the incidents within 12 hours of detection, the administration announced.

Surprisingly Strong Surge in Services PMI Tests The Range

Perhaps fate was tempted by our persistent focus on this week’s absence of big ticket market movers.  Or perhaps this is simply the biggest possible reaction to one of the week’s only potential market movers coming in MUCH higher than expected.  After all, the mantra has been that nothing that happens inside a range of 4.34 to 4.50 in 10yr Treasury yields is interesting.  While that remains true in the bigger picture, today’s reaction to the S&P Global Services PMI data was about as interesting as an uninteresting thing can be, causing an immediate spike from 4.42+ to 4.49+.  While the size of the beat is certainly surprising (54.8 vs 51.3 f’cast), the market reaction to such an event is logical.

Econ Data / Events

Jobless Claims

215k vs 220k f’cast, 223k prev

Chi Fed Activity Index

-0.23 vs +0.125 f’cast, 0.15 prev

S&P Services Global PMI

54.8 vs 51.3 f’cast, 51.3 prev

New Home Sales

634k vs 680k f’cast, 665k prev

Market Movement Recap

08:35 AM Mostly flat overnight and little-changed after data.  MBS up 1 tick (.03) and 10yr down 0.8bps at 4.415

10:33 AM Sharply weaker after PMI data.  MBS down just over a quarter point.  10yr up 7.1bps at 4.496

02:35 PM continuing modest recovery after AM weakness with MBS down 7 ticks (.23) and 10yr up 0.5 bps at 4.474

03:28 PM Unchanged From the previous update at the 3pm CME close.

Some people say, “You’re crazy to stay in residential lending in this environment, and it’s not going to improve dramatically in the near future.” No, this is crazy. Owners of vendors and lenders who are barely eking by, or losing money quarter after quarter, aside, there is plenty of sanity remaining. Given what I heard in Manhattan, we can expect many, many offerings of 2nd mortgage programs and HELOCs from investors and therefore the lenders that sell to them, given the amount of equity that’s out there. LOs know that these are homes, not houses, and many owners focus on their life there at that address and need to be shown how a 2nd may make sense. But if your client wants to treat house prices like shares of stock, here’s a zip code map showing price appreciation in this part of the business cycle. Speaking of business cycles, Bill Dallas has been through a few, and joins The Big Picture today at 3PM ET to discuss Rohit Chopra firing a missile across the bow of the credit reporting agencies, the evolving post-NAR settlement landscape, and more. (Found here, this week’s podcasts are Sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s has an interview with Experian’s Ken Tromer and Jamie Norris on helping mortgage companies optimize their business expenses and protect prospects using Experian Verify and Power Profile Plus.) Lender and Broker Services and Products

For the most part, the current week is sorely lacking in the sort of scheduled economic data and events that typically contribute to exciting movement in the interest rate world.  This morning’s report on the services sector offered one of the only potential exceptions.  For those looking for at least a little excitement, the data did not disappoint.  For those hoping that excitement would be positive, it’s a different story. S&P Global’s service sector PMI rose to the highest levels in exactly a year, and that effectively matched the highest level in more than 2 years.  Underlying details showed the highest prices in 18 months.  None of the above was good news for interest rates.  Traders immediately sent bond yields higher. Mortgage lenders base their rates on trading levels in the bond market.  The average lender hadn’t yet published rates for the day when the S&P data came out.  Those lenders simply began the day at noticeably higher rates about an hour later. Several lenders had already released rates before the data.  Most of that group ended up “repricing” to higher levels not too long after the economic data. In the big picture, 2-week highs for mortgage rates don’t mean much.  The range has been fairly narrow over that time.  We’ll have to wait for the first half of June for the most important data and events.  That’s when the real excitement is most likely to play out, for better or worse.