The president’s latest commentary comes as he is looking to new leadership at the Fed to help reduce borrowing costs, as he increasingly feels political pressure to address voter concerns over affordability.

The regulator lowered benchmarks for acquisitions of certain single-family loans including low-income refinances, and left multifamily targets intact.

A group of 22 Democratic state attorneys general filed a lawsuit against acting Consumer Financial Protection Bureau Director Russell Vought, the bureau and the Federal Reserve, arguing that the administration’s position that the CFPB cannot be funded is wrong.

The announcement follows Realpha’s two previous mergers with mortgage brokerages, as well as its purchases of AI firms and title businesses.

Three US senators opened an inquiry into insurance ratings firm Demotech and whether its assessments may be exposing Fannie Mae and Freddie Mac to growing risks tied to climate-driven insurer failures.

Stunning Display of Holiday Trading Weirdness

GDP for Q3 may be ancient history as far as econ data goes, but markets didn’t seem to think so in the hour following this morning’s release. GDP was much stronger than expected and bonds traded it like it was a legit market mover. But most of the reaction was a holiday-induced amplification of what might have otherwise only caused barely-noticeable weakness in bonds. That point was driven home by the end of the day as both Treasuries and MBS returned to unchanged levels.  

Econ Data / Events

ADP Employment Change Weekly

11.5K vs — f’cast, 16.25K prev

Core CapEx (Oct)

0.5% vs — f’cast, 0.9% prev

Core PCE Prices QoQQ3

2.90% vs 2.9% f’cast, 2.6% prev

Corporate profitsQ3

4.4% vs — f’cast, 0.2% prev

Durable goods (Oct)

-2.2% vs -1.5% f’cast, 0.5% prev

Industrial Production (Oct)

-0.1% vs 0.1% f’cast, 0.1% prev

Industrial Production (Nov)

0.2% vs — f’cast, -0.1% prev

CB Consumer Confidence (Dec)

89.1 vs 91 f’cast, 88.7 prev

Market Movement Recap

08:35 AM MBS are now down 1-2 ticks (.03-0.06) and 10yr yields are up roughly 1bp at 4.169

11:46 AM Bonds sold off a bit more after the last update, but are now back to similar levels with MBS down 2 ticks (.06) and 10yr up 1.1 bps at 4.17

02:00 PM Sideways since last update. MBS down 2 ticks (.06) and 10yr up 0.7bps at 4.167

We’ve spent the past several days reiterating and lamenting the onset of the holiday trading doldrums–a time of year that sees vastly lower volumes/liquidity/participation, and thus runs the risk of volatility that’s more random and larger than it otherwise would be. Now this morning, GDP came in much higher than expected and bonds are selling off somewhat sharply. Rather than fly in the face of the holiday trading environment realities, this is actually a prime example. The best evidence for this is the discrepancy between the size of the movement in bonds and the associated volume. Simply put, the movement in bonds is much larger than the reactions to NFP (jobs report) or CPI, but the volume isn’t even close to half the size.

It is natural to be skeptical of our dismissive tone this morning.  After all, GDP sounds like a big, important report, and a sharp sell-off seems logical given the 4.3% vs 3.3% result.  But the underlying details suggest it was simply “fairly strong” as opposed to a true barn burner (thinking of things like “real final sales to domestic purchasers” at 2.9%, and the 4 quarter avg GDP moving up only modestly in the mid-2% range, and a negative reading in cyclical GDP components). 
Bottom line: if these numbers were coming out during a more actively traded time of year, they may not be having as much of an impact.  But as it stands during the holiday doldrums, 10yr yields are pushing the ceiling of the 4 month range and MBS are down almost a quarter point.

Will rates impact the latest MBA origination forecast of $2.2 trillion next year? Sure, although… The Federal Reserve has cut overnight rates, but longer-term rates (like 15- and 30-year mortgages) have done little or have gone up. Recently news came out that Freddie and Fannie are buying securities that they produce. If GM is buying its own cars, should its stock price go up, or does the price of its cars go up? Do GSE MBS purchases really move rates? The recent news that the GSEs have been purchasing mortgage-backed securities raised predictable questions about affordability and rate relief. Conceptually, it sounds supportive. In practice, I am skeptical about the impact, and my son Robbie observed that there is an important distinction between the Federal Reserve purchasing assets and the manufacturers of mortgage credit purchasing their own output. “Market driven mortgage rates respond to investor demand, spreads, and broader macro forces. They do not meaningfully move because someone decides they should. Rates have remained largely unchanged despite these actions. That alone suggests the market is signaling skepticism. Good intentions do not automatically translate into lower borrowing costs.” (Today’s podcast can be found here and this week’s are sponsored by Gallus Insight, which is transforming employee analytics into actionable insights. Gallus’ ROI tool for learning and development activity is the most powerful in the world, and also the easiest to use. Hear an interview with Amergy Bank’s Bill Dawley on how top originators are winning business in today’s environment and where affordability initiatives and fair lending intersect.)

Mortgage rates have broadly been in a narrow holding pattern for the past 4 months and an even narrower range during December. Today will do nothing to change that with the average lender ending the day exactly where they left of yesterday. Earlier today, however, the average lender was offering slightly higher higher rates. The upward pressure came courtesy of the bond market’s reaction to stronger GDP numbers for Q3. But that initial reaction proved to be a temporary overreaction, exacerbated by lighter trading participation associated with the holiday week.  In general, lower participation greases the skids for volatility, essentially magnifying the impact of events that might not have much of an impact otherwise. The bond market is technically open tomorrow (and thus, lenders will publish mortgage rates), but it should be even more heavily affected by holiday trading vibes.  Also, there isn’t much in terms of important econ data to cause the kind of volatility seen today–no to mention the fact that today’s volatility ultimately proved to be non-existent.

The inventory slowdown came as properties sold for 1.6% below asking prices, with some sellers opting to remove their listings altogether, according to Redfin.