A Connecticut-based couple sued the bank and Cavanaugh Appraisals, LLC for denying them a refinance in 2021 because of racial bias.

Both companies have been at the center of other M&A transactions over the past two years, as each looked to expand their national footprint.

The Fed’s announcement is responsible for a 19 basis point drop in the 10-year yield over a two-day period, pushing the 30-year fixed under 7% for the first time since August, Freddie Mac said.

Today’s headline speaks for itself: one of the biggest 2-day drops in rates in decades.  Simply put, over the past 48 hours, mortgage rates have moved lower by a larger amount than almost any other time in our records. There was a similar episode in November 2022 and only one other episode in March 2020 (which we don’t really count as “real” due to the once-in-a-lifetime market dynamics in play at the onset of the pandemic).  Before that, we don’t have anything else remotely close going back to start of our intraday record-keeping in 2007.   Does any of the above tell us anything important beyond conveying the notion that rates have fallen precipitously in the past 2 days?  Not really.  It’s just “kinda cool.”   But here’s a milestone that can only be claimed by the present rate rally: Rates have dropped more in this 45 day window than in any other 45 day window we’ve measured. Again, our records only go back to 2007.  Based on Freddie Mac’s weekly record keeping, it’s unlikely that any 45 day window will match the drop seen in May 1980.  Late 1981 is also still better than the modern record, but all 3 had several things in common.  All 3 moves began with rates at the highest levels in a long time.  All 3 followed a brutally quick surge to those highs.  And all 3 played out as the financial market was contemplating a “pivot” in terms of inflation and the Fed’s policy response. The pivot trade has dominated the market over the past 2 days and arguably had a lead-off that began in November.  Whether or not it continues will depend on the data, but for now, the market is more willing to bet on the pivot unless countervailing data emerges. 

Big Rally Just Getting Started or at Risk of a Correction?

Overseas markets added on to the rate rally inspired by Wednesday’s Fed dots and press conference.  That’s a common enough occurrence that it shouldn’t surprised us, but it doesn’t carry any conclusive implications for domestic trading.  For instance, we would be well within our right to worry that a strong Retail Sales report could derail the rally.  Indeed, sales data was strong and there was a brief selling response in bonds, but the glacial momentum of the “pivot” trade was not to be deterred.  Is this just a follow-through day that’s destined to give way to a consolidation bounce or is the pivot trade just getting started?

Econ Data / Events

Retail Sales

0.3 vs -0.1 f’cast, -0.2 prev

Jobless Claims

202k vs 220k f’cast, 221k prev

Import Prices

-0.4 vs -0.8 f’cast, -0.6 prev

Market Movement Recap

08:34 AM Rally extends overnight. Modest pull-back after data.  10s down 4.9bps at 3.975.  MBS up a quarter point.

09:48 AM Bouncing back a bit from post-data weakness.  MBS up 10 ticks (.31) and 10yr down 8bps at 3.943.

01:40 PM Broadly flat, trading in the middle of today’s range.  MBS up 9 ticks and 10yr down 8.8bps at 3.936.

03:44 PM Off the PM lows now with MBS up a quarter point on the day.  10yr yield down 11.8bps at 3.906.

Everyone’s above average, right? This morning I head to Chicago where residents have the dubious honor of being the worst when it comes to estimating home values. Homes are expensive… Who knew? Apparently not the vast majority of Americans, which reminds me of the saying, “Never underestimate the intelligence of the average person.” All Star Home surveyed Americans in the most populous U.S. cities, prompting them to guess home prices in their communities to determine where people have the best and worst home value intuition, and 86 percent of people were surprised at how high home prices are in their area. Boomers (91 percent) are most surprised by high home prices, followed by millennials (87 percent), Gen X (85 percent), and Gen Z (84 percent). San Francisco locals excel in home price intuition, but Chicago residents fare the worst. (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 Xactus’ Greg Holmes and Shelley Leonard on advancing the modern mortgage through data-driven insights.) Lender and Broker Products, Programs, and Services Are you curious about the strategic insights that could shape a successful 2024 in the mortgage industry? As the holiday season unfolds, consider whether optimizing your tech stack could be the key to operational excellence in the coming year. Read the latest blog by Dark Matter Technologies for an in-depth look at addressing common tech stack pain points, identifying success indicators, and exploring solutions like the Empower® LOS. Take a moment amidst the holiday warmth to reflect on how a well-optimized tech stack may be the missing piece for a prosperous 2024. Ready to unlock these strategic secrets? Check out Empower and all Dark Matter Technologies has to offer.

“Pivot” is the word of the day as the Fed’s dot plot and Powell’s press conference are being viewed as confirmation that the Fed has pivoted away from adding restriction.  This doesn’t mean the Fed has moved toward adding accommodation because that would require a policy rate that promotes growth and inflation.  Rather, the pivot is a shift toward a lower amount of restriction.  The fact that bonds are rallying as much as they are on the notion of “less restriction” is a testament to just how bearish things have been. Just as striking is the fact that the pivot narrative is actually overshadowing this morning’s stronger retail sales data.
To be fair, there was a brief, initial sell-off in longer term bonds but it was quickly erased, not to mention the fact that it isn’t even really detectable in the bigger picture.  The following chart shows the relative movement between today and yesterday.  Perhaps just as interesting is the fact that Treasuries didn’t care about the pull-back in European bonds (note the blue line is sideways during the time that the red line is moving higher).  This speaks to Treasury-specific motivations and probably to a fair amount of short-covering.

Properties listed will pop up in the “nearby” tab of the app and customers can choose to navigate to the house of their choice.

The Federal Reserve held interest rates steady for a third meeting and gave its clearest signal yet that its aggressive hiking campaign is finished by forecasting a series of cuts next year.

The Department of Housing and Urban Development proposal, which would modernize client meetings necessary for some mortgages, is similar to an FHA move.