Wednesday is All About Dot Plot and Powell

Bonds lost ground moderately and logically on Tuesday in response to the JOLTS data. From here, this week’s volatility potential hinges on the Fed. Fed Funds Futures suggest that there’s been no change in rate cut prospects for Wednesday’s meeting.  It remains a nearly a 90% probability and thus a non-event when the cut is announced. The more important events will be the 2pm ET release of the dot plot (individual Fed member forecasts for the Fed Funds Rate) and the 2:30pm press conference with Fed Chair Powell.  While it may be fashionable to hold the cynical view that Powell’s pressers “always” hurt rates, that’s certainly not the case and we have no way to know if it will be the case on Wednesday. At the very least, the bearish set-up over the past 2 weeks should tell you that anything can happen (considering Fed rate cut days have often pushed back against the prevailing trend in rates). 

Econ Data / Events

ADP Employment Change Weekly

4.75K vs — f’cast, -13.5K prev

CB Leading Index MoM (Sep)

-0.3% vs -0.3% f’cast, -0.5% prev

JOLTs Job Quits (Sep)

3.128M vs — f’cast, 3.091M prev

JOLTs Job Quits (Oct)

2.941M vs — f’cast, — prev

USA JOLTS Job Openings (Sep)

7.658M vs 7.2M f’cast, 7.227M prev

USA JOLTS Job Openings (Oct)

7.670M vs — f’cast, 7.658M prev

Market Movement Recap

10:50 AM Sideways to slightly stronger overnight, but now weaker after JOLTS data. MBS down an eighth and 10yr up 1.5bps at 4.178

02:10 PM Weakest levels. MBS down 6 ticks (.19) and 10yr up 2.2bps at 4.185

04:17 PM Drifting out at weakest levels. MBS down 7 ticks (.22) and 10yr up 2.2bps at 4.185

Tuesday is a fairly straightforward session for the bond market.  By now, we assume most of the pre-Fed positioning would be out of the way, and we know there was a decent amount of anticipation for the JOLTS data (job openings and labor turnover survey). True to form, volume spiked to its highest levels since the 11/20 delayed release of the jobs report. Unfortunately for bonds, job openings came in higher.  The saving grace is that the “quits” rate fell to the lowest levels of the cycle (lower quits = good for rates, all else equal). The net effect is still a sell-off in bonds, but not as forceful a sell-off as it could have been without the mixed signals.

Treasury yields climbed to the highest in more than two months, following losses in most global government-bond markets, ahead of a Federal Reserve interest-rate decision that may alter expectations for monetary policy in 2026.

The provider of actuarial-related services is bringing a company that provides mortgage servicing rights analytics and risk management into the fold.

The all-stock acquisition of Mountain Commerce Bancorp in Knoxville marks the Arkansas-based company’s first M&A foray since 2022.

In oral arguments held Monday morning, a majority of Supreme Court justices seemed poised to overrule a 90-year-old precedent validating multimember independent commissions, but it remains uncertain what limits — if any — the court may impose on the president’s removal powers.

Hildene, which partners with Crosscountry Mortgage for non-QM securitizations, is doing this deal as part of its buy of an annuity provider, SILAC.

Pre Fed Jitters? Not Exactly

Both stocks and bonds began to swoon moments after this morning’s 9:30am NYSE open. That sort of pervasive selling is often seen when the Fed’s rate cut outlook is deteriorating. With the Fed on deck Wednesday, it would be easy to slap “pre-Fed jitters” on the label of today’s sell-off and call it good.  But Fed Funds Futures don’t corroborate that narrative. In fact, nothing does (at least not when it comes to obvious data/events/news).  We’re left to lean on “elevated random volatility between Thanksgiving and New Years.” It’s our least favorite explanation, but in today’s case, it’s also the least stupid one we’ve seen.

Market Movement Recap

09:39 AM A hair weaker overnight and sideways so far.  MBS down 3 ticks (.09) and 10yr up 1.2bps at 4.149

01:31 PM drifting sideways near weakest levels. MBS down a quarter point and 10yr up 3.5bps at 4.172

03:30 PM Off the weakest levels, but not much. MBS down 7 ticks (.22) and 10yr up 3 bps at 4.167

Bonds are under pressure yet again at the start of the new week–insult added to injury coming off of the worst week of selling since the late October Fed announcement. On that note, some of the recent weakness could be the bond market’s way of bracing for another unfriendly impact from the Fed. There’s also the need to make room for Treasury auctions during a less liquid time of year as well as a relatively important JOLTS release on Tuesday morning. Either way, 10yr yields are stretching the upper boundary of the medium term range.

“Blimps are one of the only forms of advertisement people are actually excited to see.” “Rob, we see all kinds of companies advertising at conferences. We are trying to lower our cost per loan, and I am doing a more formal review of third-party providers. I am wondering if there is a list of vendors who focus on certain areas out there?” Yup: a very good place to start is The Marketplace. Page down to look at the categories. (If your company isn’t on there yet, contact Jake Perkins.) Advertising is a piece of marketing, and on today’s Now Next Later (at 1PM ET) Jeremy Potter and Bri Lees, advisor to mortgage leaders, take a deep dive into the state of marketing and sales in mortgage and explore the differences between B2B and B2C strategies, where the industry is succeeding, where it needs to pivot, and the innovative marketing approaches mortgage has yet to tap into. Some will say that there are still too many lenders, too many LOs, and too many vendors. “If you get the deal, it will be with low margins.” (Today’s podcast can be found here and this week’s are sponsored by Lenders One. Lenders One is dedicated to helping independent mortgage bankers, banks and credit unions reduce costs, improve profitability, and operate competitively in the mortgage industry and within their communities. Hear an interview with C2 Financial’s David Temko on the upcoming National Home Affordability Counseling Day, where mortgage brokers across America will give free one-on-one credit counseling to create a path to homeownership.)