The certificates are backed by a single loan for 10 retail centers in nine states. AMC Theatres is the portfolio’s largest tenant, representing 10.4% of the portfolio’s base rent.

Citizens Bank’s SVP and director of secondary and capital markets reflects on what her experience with past cycles suggests about where this one may be headed.

The city claims it can build the rental units quicker through this mechanism rather than low income housing tax credits.

Much Stronger Than Justified, But That Can Happen This Time of Year

On many of the recent days with a similar amount of movement in the bond market, there was a logical correlation between the underlying data/events/news and the market movement.  For instance, friendly data or friendly Fed comments pushed rates lower in a way that generally made sense.  Today is quite different.  We have an 11bp rally in 10yr yields to the lowest levels in months, and no obvious catalyst.  One could argue that bonds are simply following the medium term trend, but that’s a lousy justification.  Best bet: keep the late December thesis in focus.  Specifically, we should always expect to see random volatility with bigger-than-normal movement in the 2nd half of December.  The real surprise is that we had to wait this long to see it.

Econ Data / Events

Richmond Fed Manufacturing Index

-11 vs -3 f’cast, -5 prev

Market Movement Recap

10:08 AM stronger overnight with additional gains early.  10yr down 5.4bps at 3.843.  MBS up a quarter point.

01:43 PM Stronger after 5yr auction.  10yr yields down 9.5bps to 3.802.  MBS up almost 3/8ths.

03:59 PM No correction after post-auction gains.  10s down 10.8bps at 3.789 and MBS up 3/8ths. 

The most notable accomplishment for mortgage rates today was the fact that they moved by a normal amount compared to the previous day.  That’s the first time that’s happened in 7 days (the calmest, flattest 7 days in more than a year). While that may be notable, it’s not a very interesting headline.  For that, we have the good old “lowest rates since ____” formula.  In today’s case, the blank would be filled by “May 2023.”   In and of themselves, the lowest rates in more than 7 months sound great.  They are great, to be sure, but not appreciably more so than several other days in the past 2 weeks.  Today’s just happen to have inched below the previous low.  The average mortgage borrower would be seeing the same quote on either day. One thing to keep in mind about today’s decent improvement over yesterday is that there were no compelling justifications for the move in terms of economic data, news headlines, or scheduled events.  That suggests a bond market (bonds dictate rates) that is trading for reasons that transcend the typical “data dependent” mantra that has dominated the past few months.  It also suggests we’re equally at risk of seeing moderate movement in the other direction in the next few trading days.

If an average trading day is a 5 on a 1-10 scale, yesterday (Tuesday) would have been a 1 in terms of volume and liquidity.  Today’s number would only be 2 to 2.5, but it’s hard to find anything else to criticize when yields are the lowest they’ve been in months.  A stronger rally in Europe certainly isn’t hurting, and moderation in oil prices (or at least friendly headlines) might be helping.  

Today’s only relevant scheduled event for the bond market is the 5yr Treasury auction at 1pm ET.  Yesterday’s 2yr auction actually managed to have an impact, so it wouldn’t be a surprise to see a reaction to today’s offering. 

Susan Toste writes to Ira Selwin who sends me (see how these things work?), “Can you believe it is 364 days until Christmas and people already have their lights up?” Goldman Sachs asks interviewees, “How many square feet of pizza are eaten in the U.S. each year?” (The trick is to work through the logic, not necessarily come up with the right answer.) Learning math is something that everyone does, to one degree or another, and doesn’t typically go onto a resume. (I learned math a whole different way than they do now in China or Japan.) What’s on your resume? How about Scapulothoracic Hypermobility? The Financial Times reports that “Banks (worldwide) shed 60,000 jobs in one of worst years for cuts since financial crisis.” I regularly receive questions about the number of LOs who have left our business. “Plenty” doesn’t ever satisfy the person asking the question, but I don’t know the exact number. Many LOs gradually scale back the number of states in which they’re licensed but continue originating: how do you count them? But a decent source is the NMLS site: knock yourself out. Anyone searching for a new company home can post their resume for free at www.lendernews.com where employers can view them for a nominal charge of $75. Today’s podcast can be found here, and this week’s is sponsored by Gallus Insights. Mortgage KPIs, automated at your fingertips. Gallus allows you to go from data to actionable insights. If you can use Google, you can use Gallus. Hear an interview with Gallus Insights’ Augie Del Rio on how lenders are benchmarking and leveraging data to make more informed analytical decisions.

At least 40 former employees are in the class action, which is made up of former loan officers from Pennsylvania and New Jersey.

PRPM 2023-NQM3 Trust has issued residential mortgage-backed securities that are supported by 516 loans, 23% of which were originated by Newfi Lending.

The deadline for a $28 million deal between Bancorp 34 and CBOA Financial was pushed later into 2024 after Bancorp 34, the buyer, announced it would restate third-quarter results to reflect a significant loss tied to a worsening commercial real estate credit.