The Federal Deposit Insurance Corp. issued proposals Thursday that would reduce planning requirements for big banks and slash deposit insurance prices, citing the financial health of the Deposit Insurance Fund.

Median purchase loan payments hit $2,198 in May, up 2.1% from April, as rising rates and home prices threaten to dampen origination volume, MBA reports.

Christopher Phelan, President Donald Trump’s nominee to chair the Council of Economic Advisers, declined to directly answer questions about recent inflation data and the effects of tariffs on consumers during a Senate confirmation hearing Thursday.

Disclosures from the housing-finance giants show their duration gaps — a measure of how closely assets, liabilities and hedges offset one another — have widened sharply in recent months, leaving their holdings more exposed to rate swings.

Experts aren’t forecasting immediate relief and instead are citing silver linings in rate certainty and greater mortgage demand as compared to the same time last year.

Mortgage rates had a great day yesterday, moving within 0.01% of the lowest levels in more than a month. They dropped just a bit more today and are now officially the lowest they’ve been since May 14th.  Today’s improvement was more of an afterthought, but nonetheless helps legitimize yesterday’s heavy lifting as something other than a freak coincidence. The only word of caution is that the last few weeks of any given quarter can see elevated volatility in a random pattern due to considerations in the trading world (mortgages are ultimately based on trading levels in the bond market). In terms of nuts and bolts, bonds got today’s modest boost after PCE inflation data came in on target. This doesn’t seem like something that should spark a reaction, but the “target” is merely a median forecast. Some traders may have been expecting hotter inflation and were thus willing to buy a few bonds when those fears didn’t materialize. 

Mostly Holding Yesterday’s Big Gains

Bonds began the day in modestly weaker territory, but not weak enough to take 10yr yields above the 4.42% technical level. That was a notable development even before considering subsequent movement. The 8:30am PCE inflation data made room for a friendly reversal with modest losses being replaced by modest improvement. Bonds ultimately weren’t able to hang onto the stronger levels seen in the morning with gradual selling in the late AM hours and another little pop of weakness following headlines that Iran had attacked a cargo ship in The Strait (not a U.S. ship, or the reaction would likely have been bigger). Bottom line: today failed to place an exclamation point on yesterday’s rally, but it still wasn’t a question mark. The only caveat is that quarter-end volatility is still a risk between now and Tuesday.

Econ Data / Events

Continued Claims (Jun)/13

1821.0K vs 1800K f’cast, 1810K prev

Core CapEx (May)

1.6% vs 0.6% f’cast, -1.1% prev

Core PCE (m/m) (May)

0.3% vs 0.3% f’cast, 0.2% prev

Core PCE (y/y) (May)

3.4% vs 3.4% f’cast, 3.3% prev

Durable goods (May)

-4.5% vs -4.5% f’cast, 7.9% prev

GDPQ1

2.1% vs 1.6% f’cast, 0.5% prev

Jobless Claims (Jun)/20

215.0K vs 225K f’cast, 226K prev

PCE (y/y) (May)

4.1% vs 4.1% f’cast, 3.8% prev

PCE prices (m/m) (May)

0.4% vs 0.5% f’cast, 0.4% prev

Market Movement Recap

08:49 AM Decent gains after PCE comes in on target. MBS up 6 ticks (.19) and 10yr down 1.2bps at 4.375

11:00 AM MBS up an eighth and 10yr down just under 1bp at 4.379

01:41 PM MBS still up an eighth but 10yr now down only 0.3bps at 4.384

Around the country, originators seem less focused on the housing bill signing ceremony postponement than on “opportunity.” There are opportunities, but not for every LO. There is the opportunity (and goal) of senior management to make their company immune from economic and world political turmoil. There is the opportunity to anchor the business to things that you can control, not to things that you can’t… like rates. Yesterday at the Mastermind Summit, Ryan Grant observed, “MLOs have the opportunity to hand a potential borrower a pre-approval letter in minutes but then explain to that borrower, ‘Here’s why that’s not enough.’” There’s always the opportunity to look at other products. For example, a “Renovation HELOC Index” was launched. There are opportunities. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Equifax, a global data, analytics, and technology company, helps mortgage lenders gain the borrower and market insights they need to improve efficiency and make accurate decisions. Access differentiated consumer credit data, powerful consumer and market insights, and income and employment data from The Work Number. Today’s has an interview with Alston & Bird’s Stephen Ornstein on all things RESPA, as well as how regulation needs to be improved for the modern times we live in.) Broker and Lender Software, Products, and Services Still working to understand what’s driving your margins in today’s volatile mortgage market? Optimal Blue’s CompassEdge hedging and loan trading platform is designed to bring more clarity to capital markets decisions, with embedded AI that helps teams interpret performance, identify potential risks, and surface next steps. Rather than relying on disconnected tools and manual workflows, your team can work within a more unified environment that connects pricing, hedging, and loan sale execution from lock through sale. Move faster, reduce manual work, and execute with confidence while capturing more value across every loan. With intuitive dashboards, automated processes, and real-time market alignment, CompassEdge can help you protect margins in any market. Ready to replace uncertainty with insight and turn decisions into consistent results? Discover how Optimal Blue CompassEdge can transform your execution today for your entire team.

The PCE price index may be a less timely report than CPI/PPI when it comes to measuring inflation in the U.S., but it’s more thorough and has stronger implications for Fed policy. Traders were apparently braced for today’s number to be a bit hotter. Bonds rallied moderately after core monthly PCE came in as-expected at 0.3%. Annual inflation is running at 4.1% at the headline level, and 3.4% at the core level (both in line with expectations. Bonds were a few bps higher in yield before the data and are now a few bps lower heading into the 9am hour.

There’s broad support for the effort to reduce costs and processes, but the Appraisal Institute warns about reducing property valuation quality control checks.