April 3rd and 4th saw the average top tier 30yr fixed mortgage rates well into the “mid 6’s.”  Many lenders were able to quote 6.5% at the time.  Just a few days ago, we noted there was still a ways to go before breaking below those early April levels, but the past few days have taken us within striking distance.  The average lender is now only 0.07% higher than they were on April 4th and that’s a gap that can be traversed in as little as one day under the right circumstances. If it is destined to be traversed in the near feature, it would likely be due to exceptional weakness in the forthcoming economic data–especially Thursday’s big jobs report.  Conversely, if this week’s economic data surprises to the upside, it would likely coincide with rates bouncing here and headline back into the recent range. And lastly, if this week’s data doesn’t cast a decisive vote in either direction, next week’s inflation reports could easily break the tie. The most interesting aspect of today’s movement was the movement itself.  It didn’t happen due to any interesting data or news headlines.  Both stocks and bonds (which dictate rates) improved as traders moved portfolios into position for the end of the month/quarter.  This can cause market movement independent of economic data/news. 

Steady Gains in the PM Hours

It’s common to see the effects of month/quarter-end trading most prominently in the PM hours and today’s quarter-end session was no exception. A glut of bond buying just after 12:30pm got the part started and yields bottomed out just before the 4pm NYSE close.  While 4pm is a time that’s associated with stocks, it has come to be the larger of the two closing bells for the bond market on month/quarter-end days for a variety of reasons (de-emphasis of CME pit over the years, increased prevalence of ETF trading, large portfolio rebalancing that involves both stock/bond ETFs, thus arguing for one unified closing mark time). From here, econ data should take the wheel although it’s always possible to see some new-month positions have an impact on the first day of a new month. 

Econ Data / Events

Chicago PMI

40.4 vs 43.0 f’cast, 40.5 prev

Market Movement Recap

09:12 AM Modestly stronger overnight with gains at the start of EU trading.  MBS up 2 ticks (.06) and 10yr down 1.7bps at 4.264

11:49 AM Very calm still.  MBS up 1 tick (.03) and 10yr down 1.8bps at 4.263

01:28 PM Month-end buying picking up a bit.  10yr down 4.8bps at 4.234.  MBS up an eighth.

04:33 PM Strong month-end move into the close.  MBS up almost a quarter point and 10yr down 4.8bps at 4.233

Month/quarter end trading is a somewhat esoteric and potentially frustrating concept for the typical market watcher because it seemingly violates the notion that market move for logical underlying reasons.  To be fair, month-end volatility also has logical underlying reasons, but the logic requires a fairly deep dive (which is why we have a primer on the topic). Today’s only econ data is/was Chicago PMI which has already come and gone with no fanfare.  Trading levels are best described as sideways from Friday and the intraday range, far narrower.  If month-end volatility picks up, it would tend to be in the PM hours–especially in the 2pm-4pm ET time frame.

The largest U.S. banks took less of a capital hit under the Federal Reserve’s hypothetical stress scenario than they did last year, but averaging the two sets of results could impact next year’s regulatory requirements.

This transaction for 230 rental units follows a March $10 million affordable housing investment in Nevada Housing Division Mortgage Revenue Bonds.

Rising insurance costs and stricter rules threaten condo affordability, but balanced reforms can preserve access, according to a member of the Community Home Lenders of America.

The regulator and conservatorship of the large government-related mortgage investors said he’s been bringing them together in unprecedented ways.

Time is running out for the 90-day pause on most of President Trump’s tariffs. But at least two bank CEOs are confident there won’t be a summer sequel to “Liberation Day.”

Modest Friday Bounce Does Little to Alter Bigger Picture

After a decent mid-day recover, bonds gave up their gains heading into the 3pm close.  It’s a level of weakness that demands no explanation in the bigger picture–especially on a Friday afternoon of a week with a rally on every single previous day.  Nonetheless, one could make a case for the bump by pointing to things like Senate moving closer to a spending bill vote with reports suggesting slightly more spending than before.  Separate headlines involved Trump declaring an end to trade negotiations with Canada–something that might imply inflation pressure to some traders. Friday aside, the week’s theme was one of lower Fed Funds Rate expectations and that will either be amplified or called into question by the key economic reports next week (as well as CPI the following week).

Econ Data / Events

Core PCE M/M

0.179 vs 0.1 f’cast

Core PCE Y/Y

2.7 vs 2.6 f’cast, 2.6 prev

Inflation adjusted spending

-0.1 vs 0.1 f’cast, 0.2 prev

Consumer 1yr inflation expectations

Down 0.1% m/m

Consumer 5yr inflation expectations

Down 0.1% m/m

Market Movement Recap

08:50 AM Slightly weaker overnight and sideways to slightly stronger after data.  MBS down 3 ticks (.09) and 10yr up 1.9bps at 4.254

09:43 AM 10yr yields are up 5bps at 4.286 and MBS are down 6 ticks on the day (0.19) and an eighth of a point from AM highs.

02:02 PM Decent recovery with 10yr nearly unchanged at 3.722 and MBS down 3 ticks (.09).

The National Association of Realtors’ Pending Home Sales Index (PHSI)—which tracks contract signings on existing homes—has remained rangebound for more than two years, constrained by affordability pressures and elevated mortgage rates. This week’s update showed a modest improvement, but the broader story hasn’t changed. Pending home sales rose by 1.8% in May, marking the first increase since February. The index is now 1.1% higher than a year ago , but still well below pre-2022 norms. Zooming out, contract activity remains stuck in a narrow band. The index hasn’t been above 80 since the summer of 2022 and continues to reflect a sluggish, rate-constrained housing market. “Consistent job gains and rising wages are modestly helping the housing market,” said NAR Chief Economist Lawrence Yun. “Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains.” Here’s how the month-over-month change broke down by region:

Northeast: +2.1%

Midwest: +0.3%

South: +1.0%

West: +6.0%