Mortgage rates technically ticked a hair lower today, but it’s more accurate to view them as being broadly sideways. Some lenders issued improvements yesterday afternoon.  Those lenders were closer to unchanged this morning.   As of this afternoon, several lenders have already issued slight rate increases due to weakness in the bond market.   Bonds dictate rates. Today, bonds took cues from two main events in the afternoon.  The first was a scheduled auction of 10yr Treasuries. Auction demand was slightly weaker than expected. This pushes Treasury yields higher and Treasury yields correlate with mortgage rates.  An hour later, the Fed released the minutes from the last Fed meeting 3 weeks ago. The minutes painted a slightly less rate-friendly picture than was in place at the time. This created a bit of extra weakness in the bond market, but only by a barely detectable amount. All told, the bonds that specifically pertain to mortgage rates were right at the same levels seen during the same time frame yesterday afternoon.  In general, that will equate to mortgage rates being at the same levels as well.

Some Selling Pressure After Auction and Fed Minutes

There were no market-moving economic reports scheduled for today regardless of the government shutdown. That left the focus entirely on the afternoon events: the 1pm 10yr Treasury auction and the 2pm release of the Fed Minutes (a more detailed account of the Fed meeting 3 weeks ago). The auction was slightly weaker than expected, which accounted for most of the upward pressure in yields in the afternoon. The minutes didn’t help (even if they didn’t necessarily hurt). Notable comments included mention of a few members who would have been OK with no rate cut and a majority of members remaining concerned about inflation. 

Market Movement Recap

09:27 AM modestly stronger overnight and holding so far.  MBS up 2 ticks (.06) and 10yr down 2.4bps at 4.103

12:01 PM Near weaker levels.  MBS up 1 tick (.03) and 10yr down 0.9bps at 4.118

01:03 PM No major reaction to middle-of-the-road auction.  10yr down 1bp at 4.117 and MBS up 1 tick (.03)

01:59 PM MBS are 1 tick lower (.03) and 10yr yields are 0.4bps higher at 4.131

02:40 PM Slight additional selling after Fed Minutes.  MBS down 3 ticks (.09) and 10yr up 0.6bps at 4.133

We’re sailing through autumn. Places like Seattle and Minneapolis are losing 3-5 minutes of sunlight a day. Donald Trump told Congress to end changing clocks, but is seems that most states will still do it (“spring ahead, fall back”) November 2. Time flies, and we’re 23 days away from Halloween. Despite how it’s celebrated by 5-year-olds and their parents, frat houses, or at many malls around the U.S., is thought to come from the festival of Samhain among the Celts of ancient Britain and Ireland. Its history also mentions the eve of the Western Christian feast of All Hallows’ Day, and the beginning of the observance of Allhallowtide, the time in the Christian liturgical year dedicated to remembering the dead, including saints, martyrs, and all the faithful departed. For something more current, today’s Lenders One’s Mortgage Matters features Kyle Draper, real estate leader, coach, and speaker at 2PM ET, and tomorrow’s “The Big Picture” at 3PM ET features Meredith Whitney, “The Oracle of Wall Street,” of the Meredith Whitney Advisory Group will discuss “Stuck in Place” dynamics, CRE stress, and whether policy can help unlock supply. (Today’s podcast can be found here and this week’s are sponsored by Truework, the only all-in-one, automated VOIEA platform that helps mortgage providers achieve up to 50 percent cost savings with an industry leading 75 percent completion rate. Today’s features an interview with Bank of Oklahoma’s Chris Maloney on what’s driving strong performance in the Agency MBS market, the outlook for refinancing and home prices, and how Fed rate cuts are shaping lending conditions and future risks.)

While there are a smattering of Fed speakers on the calendar today, the morning comments are not likely to have an impact. In fact, the average Fed speech is a forgettable event these days as there are only so many ways to say “inflation is still higher than we want, but we’re feeling a bit more nervous about the labor market.” Other than that, it is only the 1pm 10yr Treasury auction and the 2pm Fed Minutes that have any potential relevance as far as calendar events are concerned. Bonds are off to a decent start and volatility has been light in the first hour and a half.

Prolonged funding pressures in US money markets, just as bank reserves held at the Federal Reserve are dwindling, suggest the central bank may be getting closer to ending the unwinding of its massive portfolio of securities.

The minority homebuilder share of the industry more than doubled after 2007 but lags when compared to the total non-white U.S. population, according to NAHB.

More than 15% of homes that went under contract in August were canceled, as the market heavily favored buyers, a Redfin report found.

With the new option, unveiled Monday during OpenAI’s annual developers event, a user can look up a three-bedroom home in a specific neighborhood on Zillow, without leaving the ChatGPT app.

House Financial Services Committee ranking member Maxine Waters, D-Calif., asked bank regulators to give banks the supervisory clearance to extend lines of credit and modify loan terms for federal employees furloughed after the government shut down last week.

Mortgage rates have been in a very narrow range for nearly 3 weeks with the last major move seen on September 17th and 18th following the Fed rate cut. Paradoxically but not surprisingly, rates actually moved higher after the Fed cut the Fed Funds Rate. Contrary to popular belief, Fed comments and policy changes are not the biggest consideration for rates. That honor goes to big ticket economic data like the jobs report.  Case in point, the rate drop in early September after the jobs report was bigger than the jump in rates following the Fed. Moreover, the post-Fed jump was driven mainly by upbeat economic data the following morning. With the government in shutdown mode, we haven’t had the same sort of heavy-hitting econ data–a fact that largely contributes to the recently narrow range. There was some non-government data today from the NY Fed that showed a weaker view of the jobs market among consumers, thus helping rates hold in line with yesterday’s levels. Before that data, rates were set to open the day slightly higher.