This generation is more capable of increasing homeownership rates than any others over the past several decades, argues dv01’s head of research.

The U.S. economy has a better chance of avoiding a recession in the next 12 months following recent positive data on economic activity and inflation, according to Jan Hatzius, the chief economist at Goldman Sachs Group Inc.

The share of homeowners late by 30-59 days got slightly higher but remained below 1%, according to the Federal Housing Finance Agency.

Mortgage rates jumped a bit higher last Friday after dropping triumphantly during the first four days of the week.  That bounce may have cast some doubt on the level of “triumph,” but things have calmed down at the start of the new week. The average lender is right in line with the rates seen on Friday (which are still substantially lower than the rates seen on the previous Friday).  In fact, the average lender is still roughly a quarter of percent lower versus July 6/7.   While the bonds that underlie mortgage rate movement will likely be mulling some big decisions in coming weeks, there’s a bit of a lull between now and the next batch of big ticket events.  It’s not that this week’s scheduled data is incapable of causing volatility–just that the odds are lower when compared with things like next week’s Fed announcement or several of the economic reports being released the following week.

Slightly Stronger, Sideways, and Still Waiting

Monday’s trading session offered little by way of anything significant or interesting for the bond market. Yields fell in Europe and pushed back steadily higher in the first few hours of domestic trading.  AM data was stronger but not noticeably in sync with the selling pressure.  Even then, the selling was weak enough to disregard, not to mention the fact that bonds rallied back in the PM hours to hit the 3pm CME close in modestly stronger territory.  We could be waiting all the way until next week’s Fed announcement for the next big source of inspiration, but tomorrow and Thursday’s econ data could also move the needle. 

Econ Data / Events

NY Fed Manufacturing

1.1 vs -4.3 f’cast, 6.6 prev

Market Movement Recap

09:34 AM losing AM gains. 10yr now unchanged at 3.832.  MBS down just over an eighth (may look like more at times due to illiquidity). 

12:22 PM MBS bouncing back a bit, now unchanged on the day.  10yr down 1bp at 3.82

02:38 PM Modest gains continue.  MBS up an eighth.  10yr down 2.5bps at 3.805.

I am often asked about the jumbo segment of our business. Frankly, aside from the coasts and a couple cities in-between, much of the nation is not overly concerned with it. Paying $1 million or more for a house may seem excessive to most Americans, although that doesn’t mean million-dollar homes aren’t prevalent in some parts of the U.S. Per LendingTree, only an average of 6.68 percent of owner-occupied homes in the nation’s 50 largest metros in 2021 were valued at $1 million or more. The share of million-dollar homes has grown: That’s up from an average of just 4.71 percent of owner-occupied homes in the nation’s 50 largest metros in 2020. San Jose (66.3 percent) and San Francisco, CA (52.9 percent) have the largest share of million-dollar homes, the only two cities where most homes are worth at least $1 million. Including San Jose and San Francisco, the four metros with the highest percentage of million-dollar homes are in California. Only four metros (Buffalo, NY, Cleveland, Pittsburgh and Louisville, KY) have fewer than 1.00 percent of owner-occupied homes valued at $1 million or more. (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. To experience how Richey May can help you transform your mortgage business, visit richeymay.com. Hear an interview with Richey May’s Nathan Lee on outsourcing considerations and changing fixed costs into variable costs.)

With the heightened focus on economic data as a means to track progress on the Fed’s inflation-fighting policies, and the reality of the data calendar being relatively empty sometimes, it’s no surprise to see a lack of conviction on days without any meaningful data.  This is especially true of Fridays and Mondays in the summertime.  Today is no exception.  In fact, bonds have essentially been flat since last week’s rally ended on Thursday afternoon.  Looking over this week’s upcoming economic data, there’s no obvious decision for the bond market to make and that won’t really change until next week’s Fed announcement. 

Even though the price of softwood lumber has climbed up by more than 7% in the last three months, it sits 21% below its level from a year ago.

Its affiliation with Apollo Global Management frees the company from having to rely on a securitization strategy.

Analysts believe Western Asset Mortgage Capital Corp. should consider the acquisition deal offered by AG Mortgage Investment Trust.