Fairly Quiet Monday Considering Last Week’s Noise

In last week’s defense, it really wasn’t that noisy, but Friday’s Jackson Hole speech and subsequent bond rally made it seem like big things were happening. In actuality, bonds were simply getting back in line with the prevailing range that was carved out after the last jobs report and we’ll probably be waiting for the next jobs report before that range is meaningfully challenged.  Between now and then, what do you do if you’re the bond market?  Answer: have days like today with minimal movement and highs/lows that were easily contained by Friday’s range (what traders refer to as “an inside day”). 

Econ Data / Events

New Home Sales 

652k vs 630k f’cast, 656k prev

Market Movement Recap

10:12 AM moderately weaker overnight and little-changed so far.  MBS down an eighth and 10yr up 2.9bps at 4.29

01:10 PM mid day gains.  MBS unchanged and 10yr up less than 1bp at 4.269

03:57 PM Heading out at just slightly weaker levels. MBS down 2 ticks (.06) and 10yr yield up 2bps at 4.28

Last week may have ended on a high note with bonds rallying on Powell’s Jackson Hole speech, but perception was better than reality at the time. The reality was/is that Friday’s rally merely reinforced the trading range that has been ongoing since the August 1st jobs report. At the present pace and considering the econ calendar in the week ahead, we could be waiting for next jobs report before seeing a meaningful challenge to that range (roughly 4.20-4.35 in 10yr yields). This week’s key event is Friday’s PCE inflation. Even if it doesn’t tend to move markets as much as other reports, it’s important confirmation.  It’s also worth more to the Fed when it comes to making a September rate cut decision. 

Home-purchase contracts in the US were canceled at a record rate for July as jittery buyers got cold feet.

The President said in response to a press question about Federal Reserve Gov. Lisa Cook that he would fire her “if she doesn’t resign” over allegations of claiming primary residence at two properties she owns, though the legality of such a move is unclear.

Bank of Glen Burnie, which is seeking to recover from a stretch when its assets declined, hopes that its deal for a residential lender can help boost loan production.

Zohran Mamdani’s vision for New York ignores the hard math: apartments aren’t the affordable answer for families, writes the Chairman of Whalen Global Advisors.

The former Quicken Loans mortgage banker was a strong advocate for technology adoption during his 15-year run leading the company’s home loan arm.

Heading into the week, Fed Chair Powell’s speech at the Fed’s annual Jackson Hole Symposium was only event on the calendar that held much promise for motivating any major movement in mortgage rates. Not only did it deliver on that promise, but it did so in everyone’s favorite direction. Powell didn’t pivot too much from his last major speech on July 30th. But in light of the weak jobs numbers that came out 2 days later, he understandably called out a shift in the balance of risk between inflation and employment. In not so many words, like several other Fed members have pointed out in recent weeks, Powell essentially said the labor market is looking weak enough to entertain a rate cut in the near future, even as the inflation outlook remains somewhat uncertain.  The market began adjusting for this possibility on August 1st when the rocky jobs numbers came out. Today’s speech was interpreted as additional validation of that move. With that, mortgage rates saw their biggest drop since August 1st, just barely beating out August 13th’s lows to claim 2025’s lowest spot. October 3rd, 2024 was the last time the average 30yr fixed rate was any lower. [thirtyyearmortgagerates]

Jackson Hole Speech Delivers

Powell’s Jackson Hole speech was this week’s only big ticket in terms of market movement potential and it definitely delivered. We haven’t heard from Powell since 2 days before infamous August 1st jobs report. His tone logically pivoted to place incrementally more focus on the Fed’s full employment mandate while repeating that the base case is for tariff-driven inflation to be–well–transitory. Combine that with his reminder that policy rates are still in restrictive territory and the takeaway was a subtle but obvious openness to consider a September cut. Traders were surprisingly surprised by this, thus making for a decent little rally in bonds. Gains arrived swiftly and hung out uneventfully through the close.

Market Movement Recap

09:56 AM Flat overnight and slightly stronger in early trading.  MBS up 1 tick (.03) and 10yr down 1.8bps at 4.309

10:16 AM Sharp rally after Powell speech.  MBS up 10 ticks (.31) and 10yr down 7.2bps at 4.254

01:25 PM Holding fairly close to strongest levels. MBS up nearly 3/8ths and 10yr down 7bps at 4.258

03:42 PM little-changed at strongest levels.  MBS still up 3/8ths and 10yr down 6.7bps at 4.260

A few years back someone told me, “Two lenders merging in this environment is like two drunks outside a bar holding each other up.” That isn’t quite the case anymore for various reasons (we’re just one big announcement away from yet another block buster strategic deal, right?), not the least of which is certain companies are expanding while talented individuals are looking. I received a note from the head of HR at a well-known lender asking me about people looking. I pointed him to the Chrisman Job Board where job seekers can join the Talent Community for free, and employers can easily add a job listing or forward the listing to the team and they’ll take care of it for you. Do you think your company is going to last forever, like Kikkoman Soy Sauce or the Lowenbrau Brewery? Think again. Here’s a little trivia question for tonight’s happy hour. At its peak in 2004, this company had 9,094 locations. Today, 21 years later, it has just one, in Bend Oregon… This isn’t a contest; don’t write with answers please. (Today’s podcast can be found here and this week’s is sponsored by FirstClose. FirstClose provides fintech solutions to HELOC and mortgage lenders nationwide, increases profitability, and reduces costs for mortgage lenders through systems and relationships that enable lenders to assist borrowers more effectively and ultimately shorten closing times. Hear an interview with ThoughtFocus Build’s Bradley Clerkin on AI scalability in the mortgage industry, highlighting the shift from basic AI functions to agentic AI with background workers.)