The retail giant added a pro-rated dividend for TWO stockholders that would deliver a cash value potentially greater than UWM’s latest offer.

Post-pandemic rule changes also have driven the Department of Veterans Affairs’ number higher too but not as much as the Federal Housing Administration’s.

Foreclosure filings were reported on 42,430 properties in the United States last month, down 8% from the month prior but up 18% from a year ago.

While Freddie Mac’s weekly data found the 30-year average inching lower, 10-year Treasurys swung in the other direction after this week’s economic release.

House lawmakers modified a ban on big-money investors from purchasing single-family homes, broadening the exemptions for build-to-rent properties and eliminating requirements in a Senate version of the bill that affected investors divest their holdings.

Rally Reverses, Leaving Bonds Weaker in The Afternoon

The day began with promise, but devolved into yet another disappointment. After being almost a quarter point higher at 10am, MBS slid to an eighth point loss by the close. 10yr yields were as low as 4.44% early but were as high as 4.48% in the final hour of trading. Just as frustrating as the weakness is the fact that there’s no discrete scapegoat in the news or data. That said, oil prices were also moving higher during the bond sell-off. Given the absence of war-related headlines, some traders could be getting antsy due to a lack of progress in the first of Trump and Xi’s 2 day meeting. Ahead of the event, there was some speculation that it would be a venue to announce a peace deal.

Econ Data / Events

Continued Claims (May)/02

1782.0K vs 1790K f’cast, 1766K prev

Import prices mm (Apr)

1.9% vs 1.0% f’cast, 0.8% prev

Jobless Claims (May)/09

211.0K vs 205K f’cast, 200K prev

Retail Sales (Apr)

0.5% vs 0.5% f’cast, 1.7% prev

Retail Sales Control Group MoM (Apr)

0.5% vs 0.4% f’cast, 0.7% prev

Market Movement Recap

08:30 AM No drama in Retail Sales data. MBS up an eighth and 10yr down 1.8bps at 4.446

11:06 AM Minimal change so far. MBS up an eighth and 10yr down 1.2bps at 4.452

02:26 PM MBS up 2 ticks (.06) on the day, down just over an eighth from the AM highs. 10yr yields are still down 1bp on the day at 4.455

03:25 PM Weakest levels of the day with 10yr now up 0.1bps at 4.465. MBS are still up 1 tick (.03).

04:19 PM More selling. MBS down 3 ticks (.09) and 10yr up 1.9nps at 4.484

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May continues to be a more volatile month than the bulk of April when it comes to day over day mortgage rate movement. While the average day has seen that volatility play out in favor of higher rates, today was thankfully the opposite.  Yesterday’s latest levels left the average lender at 6 week highs with a top tier 30yr fixed rate of 6.57. The underlying bond market was already beginning to recover yesterday afternoon. Combined with additional, modest bond market improvement overnight, today’s 30yr fixed rate fell to 6.52% on average. The Iran war remains the primary source of volatility for markets. Some analysts expect more traction on a peace deal to come out of Trump’s meeting with Xi (which will continue into tomorrow). This is far from a given, but if it happens, it would almost certainly put additional downward pressure on rates.

A recovery toward lower oil prices paved the way for the bond market to recover yesterday morning’s weakness and the same theme continued in the overnight session. 8:30am econ data represented a modest risk of volatility, but with Jobless Claims slightly higher and Retail Sales right on target, there was almost no detectable trading response. With that, we head into the rest of the session with markets on the lookout for any meaningful war-related headlines. More than a few hot takes are expecting the Trump/Xi meeting to yield some sort of breakthrough with respect to the war, but it’s probably best to be pleasantly surprised if it happens (rather than actually planning on it happening).
Interesting bigger picture perspective: If we look past the covid-inspired volatility, Retail Sales have actually been in the same long-term trend that began after the 2008 financial crisis.

Good to know: You may see mention of surging import prices attributed to the Iran war, and while it’s true that petroleum import prices have spiked over the past 2 months, the initial pop in the chart happened in February and was attributable to capital goods and industrial materials. Also interesting is that industrial goods accounted for more of this month’s spike than petroleum, albeit just barely.

Serious delinquency transitions in older mortgages inched up, hinting at the impact of an FHA rule change’s impact in conjunction with other stressors.