Across the industry, the pace of branch shutdowns slowed this year. Still, large financial institutions continued to trim their physical footprints, with two super-regional banks taking the most aggressive actions.

The American Land Title Association pushed back against the move to allow attorney opinion letters in the financing of condo units and certain other properties.

To make amends to former and current borrowers, Mr. Cooper is footing the bill for two years of complimentary identity protection services.

Trigger leads may take a back seat to other priorities near term but growing support in both chambers for these types of bills suggests the issue has momentum.

Survey-based rate indices haven’t yet had time to account for the massive drop in mortgage rates this week, but rest assured, it was special.  That’s no surprise if you saw our coverage yesterday, which pointed out that it was the biggest drop in a 45 day window that we’ve ever measured.   When rates drop that much, that quickly, there’s always some risk that we’ll see a corrective bounce.  Sometimes such corrections only erase a small amount of the improvement over a day or two.  Other times they can be the start of weeks of gradual increases.  Either way, we usually have some indication of that resistance within a few days of the final crescendo. This time, however, the mortgage rate drop is sticking the landing.  Wednesday and Thursday were the big movement days and now today has seen almost no movement at all.  The average lender is effectively right in line with yesterday afternoon’s latest levels. While this turn of events can’t predict the future, it is a more reassuring set-up for the days and weeks ahead.  Speaking of weeks, we probably won’t know what the next leg of this journey truly looks like until the 2nd week of January after the next Consumer Price Index (CPI) comes out.  Between now and then, the year-end trading process and the light participation among traders could make for counterintuitive movement that’s slightly bigger than it would normally be during the 2nd half of a month without any holiday absences.

Any time bonds improve as much as they have over the past 2 days (and indeed over the past 2 months), there’s a risk of a corrective bounce.  In fact, one of the core concepts of technical analysis is the notion of “overbought” vs “oversold.”  There are a few ways to define these terms, but they basically define themselves.  Simply put, if traders have been doing nothing but buying bonds, it suggests an imbalance that will have to be filled by sellers. 
Unfortunately for those who wish to predict the future with momentum
The point is that we could get either outcome and we don’t know which one it will be yet.  If the rally continues, stochastics will look like 2019.  If there’s a corrective bounce, it will look like early 2023.  It may not be clear which version is winning until the data in the first week of January.
On a positive note, today’s resilience is impressive due to the fact that bonds have an excuse to be weaker.  It’s the Friday before a 3 week hibernation phase for financial markets.  This is even more palpable for bonds.  It doesn’t mean no one will be trading and that yields won’t be moving–simply that the movement may not be indicative of the market’s true sentiment.  Lower volume and liquidity mean that fewer trades and traders are required to influence trading levels.  The “Friday before an illiquid week” part means that it would make sense for traders to be exiting long positions after a huge rally (something that should push yields higher).
NY Fed Pres Williams provided plenty of ammunition for bond sellers this morning by saying the Fed wasn’t really talking about rate cuts.  There was a logical reaction initially, but then an uncanny recovery.  Needless to say, if sellers had been determined to facilitate a sincere corrective bounce, this would have been enough of a scapegoat.  The fact that we’re embarking on the remainder of the day at roughly unchanged levels is evidence of just how serious the market is about trading near these levels. 

Solid Conclusion to Superlative Week

Friday ended up being rather uneventful for the bond market, as long as you gave the drama time to play out.  The drama in question came in the form of seemingly odd comments from NY Fed President Williams who said the Fed isn’t really considering rate cuts.  Taken out of context, that was a comical and confusing assertion given that Powell said the opposite yesterday. Once the market took a moment to appreciate the context, trading levels got right back to where they were before Williams.  Specifically, bonds were roughly unchanged from yesterday afternoon–a stance they maintained through the 3pm CME close. With that, bonds managed to have a massively positive reaction to a Wednesday Fed Day WITHOUT having to give any of the gains back via token correction or otherwise.  It’s one of the calmest landings we’ve ever seen given the size and pace of the rally.

Econ Data / Events

NY Fed Manufacturing

-14.5 vs 2.0 f’cast, 9.1 prev

Industrial Production

0.2 vs 0.3 f’cast, -0.9 prev

Market Movement Recap

09:35 AM Initially weaker overnight, then stronger with Europe.  Weaker again after Williams comments, but recovering now.  MBS up 1 tick (.03).  10yr up .9bps at 3.93

12:17 PM Sideways in a fairly narrow range.  10yr down half a bp at 3.917.  MBS down 2 ticks (0.06).

02:49 PM Weakest levels of the afternoon with MBS down 6 ticks (.19) and 10yr yields up 1.1bps at 3.932.

03:35 PM Off the weakest levels now and coasting into the weekend.  MBS down only an eighth and 10yr yields down just under 1bp at 3.913

Here in Chicago, there are several restaurants that are “the place” to have afternoon tea. Tomorrow is the 250th anniversary of the Boston Tea Party. (And no, I was not working on a trading desk slinging MBS back then.) In those days, news traveled via word of mouth, rare newspapers, sermons, personal letters, or broadsides. People had time to think about things and contemplate. Nowadays, there are plenty of places from which to glean financial news. Unfortunately, the press is not one for putting good news in the headlines, and Navy Fed finds itself in the crosshairs of CNN breaking news of data on black and white borrower approval rates. Can regulators be far behind on this one? Industry vet Brian B. asks, “How much wealth was not created for minorities because of these actions? How did they treat other groups, i.e., single females, or Hispanics?” Lenders everywhere are interested in passing more costs on to borrowers regardless of race, and if so which costs? Charging for credit reports up front is certainly likely. (Today’s podcast can be found here, and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Today’s has an interview with Richey May’s Nathan Lee on profitable versus unprofitable mortgage companies and how to get in the proper growth mindset for 2024.) Lender and Broker Products, Programs, and Services

Sen. Jack Reed, D-R.I., also brought up concerns with synthetic risk transfers and so-called shadow banks, which he said are shifting risk from outside the banking system into private credit markets.

The companies failed to warn borrowers on newly originated loans regarding the consequences of missing payments, both potential class action lawsuits filed by Rogge Dunn claim.