The delivery of immediate cash value to WMC stockholders was one of two points that solidified the deal.

The privately held company added a retail branch network and a $10 billion servicing portfolio — and is looking for more.

The fintech is reducing its sales and marketing expenses and promoting a healthy pipeline of consumer banking products, representatives said.

OK, it may be a bit of stretch to consider today’s jump a “surge” as it wasn’t much bigger than some of the other increases seen in the past few weeks, but it was certainly mysterious.  When it came to the potential for interest rate volatility, today’s main event was the release of the Consumer Price Index (CPI) for July.  This is one of the major monthly economic reports that guide financial markets and the Fed in determining where interest rates should be.  If inflation came out higher than expected, rates were likely to rise, but the data actually suggested the opposite. Despite the friendly inflation report, rates ended up rising somewhat abruptly in the afternoon.  There are several potential scapegoats being discussed around the bond market campfire, but none of them aligned with the timing of the movement. When bonds lose enough ground over the course of the day, mortgage lenders can make mid-day adjustments to their rate offerings. This happened for almost every lender today–and more than once in many cases.  The net effect is a 30yr fixed rate that is back near 7.125% for top tier scenarios.  The less “top tier” the scenario (i.e. less than 25% equity or 760 credit score) quickly pushes that number into the mid 7’s.

Big Mystery Sell-Off, Not CPI or 30yr Auction or Fed Speakers

Today was CPI day and bonds lost a lot of ground.  So was CPI to blame?  No… CPI was actually pretty much in line with expectations and bonds traded sideways for the next few hours.  Then the Fed’s Mary Daly said the Fed has “more work to do on inflation.”  Did she spook bonds? Not really… There was a bit of weakness surrounding her comments, but yields clearly stabilized ahead of the 30yr auction.  Big selling followed the 30yr auction, so what that the market mover? No… That selling didn’t begin until almost 20 minutes after the auction.  Even then, the auction stats themselves were right in line with prevailing averages, so there was no justification in the auction details (never mind the fact that 7yr Treasuries had a worse day than 30s).

Econ Data / Events

Core CPI m/m

0.2 vs 0.2 f’cast, 0.2 prev

Core CPI y/y 

4.7 vs 4.8 f’cast, 4.8 prev

Jobless Claims

248k vs 230k f’cast, 227k prev

Market Movement Recap

08:50 AM Moderately stronger overnight, and volatile/2-way trading in a narrow range after CPI. 10yr down 2.4bps at 3.992.  MBS up 5 ticks (.16).

11:47 AM Into negative territory on gradual, low volume selling led by Europe.  10yr up 0.1bps at 4.017.  MBS down 2 ticks (.06).

01:23 PM Still weaker despite early afternoon recovery attempt.  MBS down an eighth.  10yr up 2.9bps at 4.045

02:56 PM Sell-off intensifies.  10yr up 6.8bps at 4.084.  MBS down just over 3/8ths.

A general discussion topic of those here at the MMLA conference in Michigan is the ups and downs we’re all facing. While mortgage applications drift down, and industry headcounts go down, and towns on Maui like Lahaina burn down, here’s something that isn’t going down: credit card debt. Talk to any underwriter or loan officer and they will tell you that loans have become more difficult, in part because of borrower debt loads, and sure enough credit card balances hit $1.03 trillion in the second quarter. And it ain’t going down. The number is up 4.6 percent from $986 billion in the preceding three-month period. For some good economist’s perspectives and interest rates in general, and one capital markets guy’s, tune in to “Unparalleled Insights into Trends and Bold Predictions” with Selma Hepp (CoreLogic’s Chief Economist), Michael Fratantoni (MBA’s chief economist), and Rob Chrisman” on Wednesday August 16th at 1PM ET/10AM PT, sponsored by TrustEngine. (Today’s podcast can be found here and is sponsored by SimpleNexus, an nCino Company, developer of mortgage technology uniting the people, systems, and stages of the mortgage process into one seamless, end-to-end solution. Hear an interview SimpleNexus’ Jay Arneja on closing technology initiatives, standardization, and digital transformation impacting the industry at the moment.) Lender and Broker Software, Products, and Services Mortgage leaders: The home insurance market is facing unprecedented volatility with carriers declining new business and increasing premiums to an all-time high. This can delay closings and even lead to DTI exceeding acceptable limits once accurate insurance costs are factored in. Matic, a home insurance marketplace built for the mortgage industry, helps borrowers save time by shopping multiple A-rated carriers at once and providing transparent pricing and coverage options. With flexible integration options for your company, Matic adds visibility and control, allowing lenders to foresee potential issues that could result in delayed closings. To learn how mortgage enterprises can gain efficiencies and add a new source of revenue with Matic, book a demo today. For more strategies on how to navigate the next phase of the housing market, get Matic’s latest report.

This is the catch when it comes to economic data with high potential to cause a big reaction in bonds: the key word is “potential.”  It takes a big beat or miss to cause the big reaction and today’s CPI has neither.  As such, bonds have rapidly vacillated between relief and resignation on a micro scale.  While it may not be the resounding victory bond bulls were hoping for, it still fits the big picture narrative of a longer-term victory.  It also could have been a lot worse.

As for the data itself, the details are encouraging when we look beyond the broader measures.  For instance, Core CPI excluding shelter continues to trend lower and is now in negative territory, month-over-month:

The only hesitation in getting too excited about this data is that the shelter/housing component of CPI is likely to remain a drag on the disinflationary trend.  In the 70s and 80s, it took a much bigger spike in housing costs to result in the sort of price contraction that would truly benefit housing costs.  And even then, price declines never lasted for more than a few months.  In the current case, we may need to see rates fall BEFORE inventory thaws enough for prices to follow suit.

All this having been said, even with housing costs failing to improve much, core inflation is where it needs to be.  Now it just needs to stay there long enough to convince the Fed it isn’t a head fake.

But its operating income missed estimates with servicing income and gain-on-sale margins coming in lower than expected.

The company, which recently divested in the forward mortgage business and sold off its title services unit, reported a $222.5 million loss.

The agency’s president, Alanna McCargo, called the nonbank liquidity issue “the biggest of our time,” while speaking at the Bipartisan Policy Center Tuesday.