It’s unclear if the industry can recover from what is surely one of the most troubling rate spikes in modern economic history. Invoking one of the most classic Simpsons quotes to qualify today’s headline: “by the way, I was being sarcastic.”  Getting back to saying things that are true and lacking in sarcasm: anything that happens in a yield range of 4.34-4.50 is utterly uninteresting.  Yes, we did have a modest amount of weakness this morning with bonds chasing UK yields higher after hotter inflation data, but again, the weakness didn’t even begin to challenge the range.  The afternoon brings a 20yr bond auction and the Fed Minutes.  Neither are expected to raise any pulses.

Understanding the peril is important for both primary and secondary mortgage market pricing of loans and risk, experts in a panel to the Mortgage Bankers Association’s Secondary Conference said Tuesday.

The department will release a circular to remove restrictive language potentially hindering veterans’ home buying power until a new policy is formally introduced, it announced Tuesday.

The hack that occurred in December affected 27,746 mortgage customers, the South Carolina-based lender said.

Attorneys representing the collective suit are set to receive $1 million, per the settlement.

Referring to the past 3 business days as a “losing streak” for mortgage rates may be a bit harsh.  During that time, the average top tier 30yr fixed rate rose less than an eighth of a percent–the smallest increment typically separating one rate from the next.  This also meant they remained well below the recent highs from late April (another 0.375% higher than yesterday’s levels). In nuts and bolts terms, yesterday’s average was 7.10.  Today’s is 7.05.  And April 30th was 7.51%.  Prefer pictures?  Here you go: [thirtyyearmortgagerates] In terms of the interesting stuff that has an impact on rates from day to day, there really hasn’t been much going on this week.  Yes, rates have moved a bit, but the underlying market movement hasn’t been clearly driven by any data or headlines.  The only exception would be some volatility this morning surrounding comments from several Fed speakers, but trading levels were not much different than before the comments. Tomorrow brings the release of the minutes from the most recent Fed meeting (3 weeks ago).  In this environment of high transparency and frequent speeches from Fed members, it’s hard to imagine that the minutes will cause any drama.  This is a bit of a paradigm shift for some market watchers who have seen the minutes send rates quickly higher or lower in the past.  But that was then, and this is now… probably.  

No Fireworks Expected From Fed Minutes

Day 4 of the 11 day weekend is in the books and the bond market did exactly what you’d expect if you were expecting the least interesting outcoming.  Specifically, yields had drifted as high as 4.45+ in the overnight session.  That’s a bit too close to the 4.50 range boundary for 11 day weekends!  But traders figured it out and started pushing back toward more central levels in spite of several Fed comments that might be considered hawkish.  Speaking of the Fed, tomorrow brings the minutes from the most recent meeting (3 weeks ago).  While Fed minutes have had huge impacts in the past, we’re not expecting fireworks from this installment. 

Market Movement Recap

10:26 AM Modestly stronger overnight with additional gains in the first two hours.  10yr down 3.4bps at 4.412 and MBS up 5 ticks (.16).

11:40 AM Mostly sideways, near best levels.  MBS up 5 ticks (.16) and 10yr down 3.7 at 4.409

02:45 PM Guess what! Still sideways.  MBS up 5 ticks (.16) and 10yr down 3.4bps at 4.412

Ever since the inflation data in Q1 proved to be less rate-friendly than we might have hoped, the Fed has been exactly as unfriendly as we might have expected.  In other words, things have been logical.  The Fed didn’t have enough confidence to talk about rate cuts before and they have even less confidence now.  Still, they had to address the improvement in April’s data (out last week) and they’ve been quick to say they need several more months of the same in order to cut.  Indeed, the conversation has shifted decidedly back in favor of “caution against cutting too soon” as opposed to caution against sabotaging an economic recovery by leaving rates too high for too long.  Apparently, bonds are well-priced for such things. Even as several Fed speakers reiterated hawkish messages this morning, yields moved modestly lower.

Tuesday is 4th day in the 11 day weekend culminating in next Monday’s Memorial Day holiday.  The base case is for broadly sideways movement in the bond market with anything inside a range of 4.34 to 4.50 being completely uninteresting.  Fed speakers were the only game in town on today’s event calendar and at 4.41-ish, yields are safely in the middle of the range. 

The Federal Housing Administration also instituted a new language preference requirement that servicers must observe in transfers.

At an industry conference, Consumer Financial Protection Bureau Director Rohit Chopra said he was open to suggestions on how to increase choice and competition to benefit mortgage lenders and borrowers.