Former employees claim the company made staffers attend pre-shift meetings before permitting them to clock in, according to a suit filed in a U.S. District Court in Michigan.

In its annual report, the Federal Deposit Insurance Corp. explored the various credit, market and operational risks facing the banking sector. It also explored crypto and climate issues.

But that was offset by a decrease in most other residential construction materials, the National Association of Home Builders said.

The matter stems from 2006 and 2007 and related to the issuance, underwriting and sale of the securities, UBS said in a statement Monday.

We’ve had to use words like “effectively” or “nearly” in the past few weeks to refer to mortgage rates’ proximity to the highest levels since November 2022.  As of today, it’s official.  The average lender is quoting top tier 30yr fixed scenarios at the highest rates since November 7th. In both cases, borrowers would be seeing quotes around 7.25% since rates tend to be offered in increments of 0.125%.  The only time they were higher in recent memory was the 7.375% range seen on October 20th, 2022.  Before that, you’d have to go back more than 20 years to see anything higher. Is this the end of the world?  Not really.  It’s certainly not as fun or easy for prospective borrowers as rates in the 5% range, but 7%+ rates are definitely not “new” anymore.  Those who need to buy or refi can either swing the payment or they can’t.  Past precedent suggests a near certainty of good opportunities to refinance to lower rates in the future.  The only uncertainty is how long you’d have to wait. Some forecasters see rates beginning to move lower before the end of 2023, while the more pessimistic crowd thinks we could be stuck in a similar range through most of next year.  One thing’s for sure, rates almost never stay that flat for that long. We’ll continue a discussion throughout the week of the sorts of things we’d need to see in order for rates to improve.

Rates Are Changing The Rules in The Middle of The Game

You know the part in the movie with the plot twist where the good guy is actually a bad guy?  That’s not exactly what the bond market’s inflation narrative has done to the mortgage community, but it’s close enough to feel that way.  Cooler inflation was supposed to usher in a trend toward lower rates, but just when the 2nd consecutive CPI report suggested that cooling was well underway, rates are suddenly more concerned with other “stuff.”  Evidence for that continued to roll in this morning as 10yr yields hit 2023’s highs.  

Market Movement Recap

09:31 AM Unchanged overnight through 7:30am ET.  Weaker since then.  10yr up 4.3 bps at 4.203.  MBS down 10 ticks (.31) in 5.5 coupons.

11:53 AM Decent rebound after 10am.  MBS down only 6 ticks (.19) and 10yr up .6bps at 4.166.

02:50 PM Mid day recovery waning.  MBS down 10 ticks (.31) and 10yr up 2.5bps at 4.185.

For anyone attending the California MBA’s Western Secondary starting this weekend, here’s a challenge too good for any tennis players to pass up. Augie Del Rio, CEO of Gallus Insights, and I will play doubles against anyone Sunday afternoon from 2-4PM across the street from the Waldorf. The loser of 2 out of 3 sets pays $500, the winner gets to decide the charity. First two to email Augie snags the opportunity. (I don’t know Augie’s skill level, but I am old… it’ll be like shooting fish in a barrel.) Speaking of the Western Secondary Market Conference, the California MBA uses the financial resources derived from this to support advocacy efforts in Sacramento. No “lobby rats!” If you’re going, sign up. Support the organization! (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. Hear a short chat between Robbie and me on the Western Secondary Conference and its impact over the years on the industry. Lender and Broker Software, Products, and Services Even if you haven’t entered the world of online dating, no doubt you’ve heard the phrase “swipe right.” Online dating profiles provide a person’s quick summary and those viewing can swipe right in hopes of a match and the chance to learn more. Similarly, Mobility Market Intelligence (MMI) has released its new LO Quick Profiles tool, providing a summary of an LO’s production and top referral partners, allowing lenders to evaluate LOs based on real-time, accurate transaction history. With the click of a button, you can view production volume metrics including loan production volume, transaction types, loan types, top buy-side & list-side agent partners and top regions based on performance. MMI’s LO Quick Profiles also arm recruiters with the concrete performance data they need to decide whether or not to “swipe right” on potential candidates. Learn more about your potential matches with MMI’s LO Quick Profiles today.

This week and next week are two of the most affected by summertime trading conditions (lower volume, lighter liquidity, seemingly random directional motivations).  Rates are also starting out at the highest levels of the year despite a friendly CPI reading last week, so maybe it’s a good time to ask what rates even care about these days.  After all, it was supposed to be inflation, yet here we are.  
There are a few key themes in play right now that go beyond inflation.  Some of them circle back to inflation, however.  For instance, market chatter has quickly adopted the phrase “no landing” to replace the question of a “soft landing” for the post-covid economic growth. 
1. “No Landing”
The assumption had been that restrictive Fed policies would crimp economic output in such a way that would make it difficult for the Fed to engineer a soft landing that balanced the need to reduce inflation while attempting to avoid undue damage to the economy.  
Now, almost 2 years into the most aggressive rate hike cycle in decades, job growth numbers have only just fallen back to levels that would be considered “very strong” at any other point in the previous economic expansion.  Granted, not all the data is as upbeat, but historically low unemployment and historically strong job gains are important indications of economic resilience–at least for now.
If there’s “no landing,” that could imply less downward pressure on inflation.  While modest in the bigger picture, the recent uptick in fuel prices feeds that narrative.  Some analysts see the past 2 months of lower inflation readings as a temporary blip caused by a correction from an overdone spike in fuel prices.  They see the recent increases as more sustainable (especially in a “no landing” scenario) and sustainably higher energy prices would likely prevent annual inflation from making it back to 2%.
2.  “Old fashioned supply/demand 101
This is actually all about supply.  The government is spending more than it did last year and taking in less revenue than it did last year.  It’s also paying historically high rates of interest to service its debt.  All of the above is a recipe for increased Treasury issuance which, of course, was seen with the recent refunding announcement.  Fitch’s downgrade wasn’t a huge complicating factor there, but perhaps a modest one.  
3.  Fed’s shift from “finding” to “holding” a ceiling rate
The Fed has arguably found the ceiling for this rate hike cycle although they could technically still hike if the data re-accelerates.  One would think that would be good for rates, but it’s really only been good for the yield curve.  Shorter term rates have benefited at the expense of longer term rates.  After all, short term rates don’t need to move any higher if the Fed isn’t seen needing to hike again.  So any adjustment in trading levels in response to the economy or the Fed’s outlook (which, again, is an outlook for the “length of time spent at a ceiling”) are more concentrated in the longer end of the yield curve.  This is that “bear steepening” that everyone’s been talking about.
What’s all this mean?
Short term rates have to fall before long term rates can fall.  Short term rates are highly dependent on the Fed’s outlook for the length of time spent at the ceiling.  If the economy contracts (or moves in that direction) and if inflation remains on track for 2.0% annually, it could only take a few months for the Fed to start talking about a future rate cut.  2s would respond and 10s would see that as permission to follow, albeit a few steps behind.
The fuel price/econ growth dynamic means that those things need to moderate before we’re going to see much relief in rates.  They’re also precursors for the Fed’s “ceiling time” thoughts.
The supply issue in Treasuries is a tough one.  Any discussion about trying to get the U.S. government to either stop spending so much money or start taking in more revenue seems like it would only exist in jest, regardless of political stripe.

Banking and housing experts say that if additional capital burdens spur large banks to pull back on mortgage origination, servicing and funding, the ripple effects could be felt more intensely in the housing market than on banks’ bottom lines.

Houses in the northeast and midwest got more expensive. In the South and the west, prices dwindled, according to the organization’s Metropolitan Median Area Prices and Affordability report.