Once again, bonds were modestly weaker overnight and once again, that weakness is being reversed in early trading. Whereas scapegoats were nowhere to be found yesterday morning, Tuesday has a few. The first move followed a comment from the White House regarding reports that Amazon was considering listing tariff impacts on prices. While this has since been clarified, it caused initial selling in stocks and buying for bonds. The 9:30am NYSE open saw both stocks and bonds improve. Lastly, the 10am econ data didn’t necessarily add to the gains, but it at least stayed out of the way.

My cat Myrtle was always interested in both the primary and secondary markets… for line-caught halibut. In residential lending, the secondary markets shouldn’t be a mystery to anyone. Did you know that Fair Housing laws apply to the secondary markets? HUD’s overview notes that “It is illegal discrimination to refuse to purchase a loan based on race, color, religion, sex (including gender identity and sexual orientation), disability, familial status, or national origin.” In primary and secondary markets hungry for borrowers and assets like MBS, this isn’t currently a problem, so that’s good. In the secondary markets, accurate data commands a premium, whether it is borrower data, credit data, genetic data, and now… neural data, they’re all for sale. (Elon Musk’s Neuralink, brain implant tech, is considered medical technology, thus supposedly covered by HIPPA.) Repositories of mortgage, servicing, & borrower data see value in using the data and reporting the information, while worry continues to mount over non-government agency DOGE having nuclear, Medicare, Social Security, and population data for U.S. citizens. Some say, “Most have nothing to worry about” while others say, “I want my privacy.” Stay tuned. (Today’s podcast can be found here and this week is sponsored by CreditXpert, the credit optimization platform that helps today’s top mortgage originators and more than 60,000 mortgage professionals qualify more applicants, make more competitive offers, reduce LLPA premiums and close more loans. Hear an interview with American Pacific’s Audrey Boissoneau on the latest conversations that originators are having with borrowers as we enter Spring home buying season.)

Sellers have roughly a month to bring transactions involving properties from the “claims without conveyance of title” and REO programs in line with the changes.

In the megabank’s latest sign of progress with regulators, it said that a 7-year-old CFPB order has been terminated.

The Wisconsin class action would retroactively award relief to some former homeowners and comes two years after a Supreme Court ruling in a similar case.

David Spector, the firm’s CEO, touted Pennymac’s technology, consistency and support for the broker channel.

The fraudsters aren’t doing anything new or sophisticated, but are successfully using familiar tactics, said reports from CertifID and FundingShield.

Mortgage rates ended last week at the lowest levels since April 7th.  The average lender remained at those same levels at the start of business today, but many lenders offered modest improvements as the day progressed. Mortgage lenders prefer to update rates only once per day, but they will make mid-day adjustments if the underlying bond market moves enough.  Fortunately, today’s adjustments were toward slightly lower levels. That said, the changes were small enough that the average borrower may not notice any difference versus Friday’s rate quotes. As the week continues, there will be more and more scheduled events with the power to cause intraday volatility and even to impact the longer-term trend. As for that trend, it is arguably flat at the moment after experiencing significant volatility for most of the month of April. 

No Whammies in Treasury Borrowing Estimate

Bonds were slightly weaker overnight but quickly moved into stronger territory as volume and liquidity ramped up for the new week. Gains were modest and linear–largely extending the friendly trends seen last Thu/Fri. The only key calendar event was the Treasury refunding estimates this afternoon.  While there are some potentially alarming ways to read the newswires (i.e. “June borrowing estimates up to $514b vs $123b previously”), the large apparent change is due to accounting and not reflective of a $391 bln increase in spending or decrease in revenue. In other words, there were no whammies for the bond market. If anything, it was treated as good news based on yield movement at 3pm ET.

Market Movement Recap

10:21 AM Moderately weaker overnight, but pushing back since 9am ET.  10yr up 1.3bps at 4.25 and MBS down 2 ticks (.06).

01:33 PM Gains continue.  MBS up 1 tick (.03) and 10yr down 1.2bps at 4.225

03:20 PM Favorable reaction to Treasury refunding estimates.  MBS up 2 ticks (.06) and 10yr down 3.0 bps at 4.205

When getting a sense of what’s happening in the bond market, it’s frequently safe to ignore the last 2 hours of trading on Friday and the first 2 on Monday. When that logic is applied today, we found this morning’s 10am yields precisely in line with Friday’s 3pm levels and MBS doing just a bit better. There was just a bit of additional improvement after the Dallas Fed Survey.

This is the only day of the week without any major data or calendar event in the morning hours. Broader market focus remains on equities and earnings season, but Treasuries get quarterly refunding estimates at 3pm–something that can occasionally have a very noticeable impact.