July represents the core of the summertime lull in financial markets.  June and August are typically part of the lull unless econ data is suggesting an imminent shift in Fed policy.  This is so well understood that back in May 2013, Kevin Brady famously asked Ben Bernanke if QE tapering could start before Labor Day. It was an odd question to anyone who didn’t understand just how tuned out politicians and market participants can be during these months. Data-free Monday mornings during these months aren’t necessarily forbidden from showing some volatility, but a flat trajectory is the least surprising thing to see at the start of the week. Yields have been orbiting 4.34% in an increasingly narrow range.  This is good perspective considering the last 2 jobs reports seemed like “big deals” relatively, but actually fit inside this consolidation pattern.

Tomorrow could be a different story due to the CPI release–one of the only economic reports that can overcome the sideways summertime momentum.

The tax delinquency rate hit a seven-year high last year with residents of some states seeing amounts owed increasing by more than 50% since 2019.

Throughout Kolyer’s career he innovated securitization structures with commercial real estate and residential mortgages, commercial and consumer receivables.

The settlement resolves legacy allegations the state attorney general made about how the company handled mortgages before changing its role.

The correspondent giant, whose earnings have trended positively in recent quarters despite market headwinds, has made several debt moves this year.

Blend Labs had 23 new or expanded relationships in the fiscal period, double that of the first quarter, including 18 related to consumer banking or home equity.

Mortgage rates finally moved in a slightly more noticeable direction today, but the change was still inconsequential in the bigger picture. The average 30yr fixed rate in our index edged up a mere 2 hundredths of a percent from 6.55% to 6.57%, exactly matching the levels seen on August 6th. This leaves rates in the same low range they’ve occupied all week. This week’s stability follows last Friday’s jobs report, which pushed bond yields—and by extension, rates—sharply lower. Since then, daily market movements have been too small to force meaningful lender changes. Even with today’s tiny bump, top tier scenarios remain in the mid-6% range. Next week brings far greater potential for movement. Tuesday’s Consumer Price Index will provide a critical update on inflation and may shed more light on how recent tariff changes are impacting prices. Several Federal Reserve officials are also scheduled to speak, offering an opportunity to gauge whether last week’s weaker jobs data has shifted their willingness to cut rates. Between these two factors, the calm we’ve seen this week could give way to a much more volatile landscape in the days ahead.

Focus Shifts to Next Week’s High Stakes CPI

Bonds lost ground at the fastest pace of the week on Friday, but even that ended up being insignificant in the bigger picture. The bottom line is that this week’s trading helped solidify and consolidate the gains seen after last week’s jobs report. With nothing of note on tap today, focus quickly shifted to the risks/opportunities inherent in next Tuesday’s CPI report–one of two key players when it comes to determining the next big move for rates (the other being the next jobs report in early September). Higher inflation would suggest bonds erase more of their post-NFP gains whereas lower inflation would argue for another challenge to the 10yr technical floor at 4.20%. 

Econ Data / Events

Jobless Claims

226k vs 221k f’cast, 219k prev

Continuing Claims

1974k vs 1950k f’cast, 1936k prev

Market Movement Recap

10:11 AM Losing ground fairly steadily this morning.  MBS down an eighth and 10yr up 2bps at 4.275

01:01 PM Flat after initial selling.  MBS down 3 ticks (.09) and 10yr up 2.9bps at 4.284

03:24 PM Treasuries heading out at weakest levels with 10yr up 3.1bps at 4.286.  MBS still steady with a 3 tick (.09) loss.

Any week in early August (before anyone is back to school yet) classifies a “dog days of summer” type of week for the bond market. Movement is more random. Ranges are narrower. And major technical levels are rarely challenged in a significant way. Think of the present week like this. Last Friday saw 10yr yields drop from 4.4 to 4.2.  Junior traders could be left with the instruction to sell 4.2 and buy 4.25 in the following week. That’s what we saw Monday through Thursday. Now today, yields are creeping up just a bit more amid light volume and light liquidity. 

It’s not a move that we’d read too much into. In fact, 4.28 had been the only major technical level overhead after bouncing at 4.19 on Mon/Tue.  We won’t get a good idea of the current state of bond market momentum until next Tuesday’s CPI.  Bottom line: incidental and inconsequential weakness so far this morning, but still squarely in “victory” territory as far as the past 3 months are concerned.

People gearing up for the Western Secondary in Southern California see that “technology” is on the agenda. (Of course, it is always on every agenda, right?) Is the making of baby carrots considered “technology”? When Google tells you that part of its sales business was hacked, do you even care? On Monday, Jessica Evett, SVP of Product Strategy and Technology Ops, CloudVirga, discussing how to think about what point of sale means now? Where is the data we need and how do we collect and verify it for approval? Embalmers don’t read this Commentary, nor do they use a lot of technology: Embalmers are on this list of jobs least likely to be affected by AI. (Remember the source.) There’s also a list of jobs in that link likely to be most affected by AI. Ugh. Do you need digital project intelligence, helping your forecast your, and your company’s, business? There’s Shilo AI; “the innovative force in real estate technology” that just raised $2.6 million in its latest funding round. Don’t forget: Never take meeting notes again. Get transcripts, automated summaries, action items, and chat with Otter.AI to get answers from your meetings. (Today’s podcast can be found here and Sponsored by Total Expert, the purpose-built customer engagement platform trusted by hundreds of modern financial institutions. Total Expert turns customer data into actionable insights that help lenders engage and guide consumers through complex financial decisions. Hear an interview with Ardley’s Nathan Den Herder and Taylor Potter on borrower behavior and loan data from portfolios in the second quarter.)