A previous report on Waterstone Mortgage’s Q3 earnings contained inaccurate information. We are correcting the record.

Malloy Evans and Danielle McCoy are moving on as both Williamson and Tom Klein, deputy general counsel, take on their respective responsibilities for now.

Bonds Improve After Treasury Auctions

Treasury auctions don’t always cause a reaction in bonds, but they did today. This has less to do with the results being remarkable and more to do with the fact that there were two big auctions on a Monday (as opposed to the typical auction schedule that plays out Tue-Thu) as well as the fact that there’s not much else going on in terms of data due to the shutdown. In hindsight, we can see the market likely built in a small concession ahead of these auctions, and the concession was traded back out after the auction results printed. One final way we know the auctions are having an impact is via the outperformance of MBS. Since MBS aren’t weighed down by a big glut of new supply, they were free to outperform both 10 and 5yr Treasuries–something like probably would not have happened so decisively in the absence of the auction cycle. 

Econ Data / Events

m/m CORE CPI (Sep)

0.227% vs 0.3% f’cast, 0.3% prev

m/m Headline CPI (Sep)

0.3% vs 0.4% f’cast, 0.4% prev

y/y CORE CPI (Sep)

3.0% vs 3.1% f’cast, 3.1% prev

y/y Headline CPI (Sep)

3.0% vs 3.1% f’cast, 2.9% prev

m/m SUPERCORE

.351 vs .330 prev

Market Movement Recap

10:01 AM Modestly weaker overnight with some additional selling after 9:30am NYSE open. MBS down 2 ticks (.06) and 10yr up 1bp at 4.029

01:19 PM Stronger both before and after 5yr Treasury auction.  MBS up 1 tick (.03) and 10yr down 2bps at 3.999

As the shutdown continues, econ data remains sparse. This makes for smaller, more range-bound movement overall with last week making a decent case to established the floor of the current range in Treasury yields. A good-but-not-good-enough CPI helped seal the deal on Friday, but the impending Fed announcement is just as relevant.  The market has already priced in the 25bp cut and has moved on to the next consideration: a dovish vs hawkish press conference. Combine that uncertainty with the need to underwrite the week’s accelerated Treasury auction cycle (Mon/Tue as opposed to the normal Tue-Thu) and it’s completely forgivable to see 10yr yields respecting a floor of 3.97 after briefly challenging it last week. 

I was recently on a hike with a gal pal, and we were talking about her future. I asked, “You don’t have any kids. Who is going to take care of you when you get older?” She replied, “The sommelier.” The future should be on everyone’s minds. I met up with a friend last week at the MBA Annual, and, knowing that his son had worked summer jobs for a lender in our business, I asked him about his son entering the residential lending. He replied, “He was all set to become a loan officer assistant but then went to work for ICE due to its $50,000 signing bonus program.” Paying off a student loan should matter to recent college grads, and certainly impacts buying a home down the road. I hear plenty of rumors about student debt. It turns out that, among those who ever incurred debt for their education, 8 percent were behind on their payments at the time of the 2024 survey, and 33 percent had outstanding debt and were current on their payments. Fifty-nine percent had completely paid off their loans. (Today’s podcast can be found here and this week’s are sponsored by Optimal Blue, the only end-to-end capital markets platform built to power performance, precision, and profitability, helping lenders of all sizes operate more efficiently, manage risk more effectively, and maximize results. Today’s has an interview with Rob Chrisman on takeaways from MBA Annual, the mood of the industry, and what to look forward to as conference season winds down.) Services, Products, Software, and Tools for Lenders and Brokers

Mortgage rates fell to the lowest levels in a month last Tuesday and barely budged through the rest of the week. Now, at the start of the new week, the average lender is perfectly unchanged from last Friday. This means there are only a small handful of days with meaningfully lower rates going all the way back to late 2022. As the government shutdown continues, the bond market (which dictates rates) continues missing out on the bulk of relevant economic reports that normally help guide momentum throughout the month.  Depending on the day, however, there can be other sources of inspiration. In today’s case, the bond market took some solace from a well-received auction of US Treasuries. When it comes to auctions, when demand is stronger than expected, it can put some downward pressure on rates. This happened today, and it prompted a small handful of lenders to issue mid-day improvements, but it wasn’t enough to change the average rate.

The Arkansas-based company spent nearly four years on the M&A sidelines, grappling with asset quality issues and litigation tied to its 2022 acquisition of Texas-based Happy State Bank. Now it’s signed a letter of intent to buy an unnamed bank.

James is contesting charges brought earlier this month by a prosecutor whom President Donald Trump abruptly installed after her predecessor resigned under pressure.

The mortgage unit of Hilltop Holdings lost $7.2 million pretax in the third quarter with lower volume, following making a small profit three months prior.

The company cited efforts to improve profitability behind its decision, with Popular joining a line of other banks in ending mortgage operations in 2025.