Bill Pulte’s social media posts saying inflation has fallen far enough added to intensified political pressure on the independent Federal Reserve chairman.

The department’s head pointed out that manufactured housing is the most affordable non-subsidized option for building homes.

The Senate version includes restoration of the mortgage interest deduction, but a tax code revision likely would stifle foreign investment in real estate.

Seven officials now foresee no rate cuts this year, compared with four in March. Two others pointed to one cut this year.

Previous predictions of a “silver tsunami” that might add essential housing supply are ebbing as senior citizens see benefits of aging in place, Redfin said.

It happens, but it’s rare. A Fed “dot plot” day has come and gone with mortgage rates almost perfectly unchanged from the previous day. This speaks to the level of indecision not only in the market, but also among Fed members. First off, what’s a “dot plot day?”  The dot plot (or simply, “the dots”) refers to a chart/table in the Fed’s economic projections that shows where each Fed member sees the Fed Funds Rate at the end of the next few years.  These projections only come out on 4 of the 8 Fed days per year and they’ve grown to be a leading source of volatility for financial markets on those days. Since it was already a foregone conclusion that the Fed would not be cutting rates today, the market was forced to take its Fed-related cues from the dots and from Fed Chair Powell’s press conference. The latter was just slightly negative for rates (i.e. it implied some upward pressure), but the dots did no harm.  After the dust settled, the underlying bond market was flat to slightly stronger on the day due to improvement that was in place several hours before the Fed announcement.  Markets are closed tomorrow for the Juneteenth holiday, but will reopen on Friday.

Fed Threads Needle of Apathy

Today marked one of only 4 days of the year with an updated Fed dot plot. When it came out, there was a fairly pitiful volume response relative to other dot plot days and an even more underwhelming level of volatility in the bond market. It wasn’t until almost 45 minutes later that bonds showed actual signs of life in response to Fed Chair Powell saying flat-out that they’ll be able to make a better decision if they wait a couple of months.  But even after that modest bounce in bond yields, we were just barely getting back to unchanged levels on the day.  Bottom line, the Fed easily threaded the needle of bond market apathy–not too surprising given that it’s a wide eye at the moment, but definitely not a given on dot plot day.

Econ Data / Events

Jobless Claims

245k vs 245k f’cast, 250k prev

Continued Claims

1945k vs 1940k f’cast, 1951k prev

Building Permits

1.393m vs 1.430m f’cast

Housing Starts

1.256m vs 1.36m f’cast

Market Movement Recap

09:28 AM Modestly stronger overnight and little-changed after econ data.  MBS up 2 ticks (.06) and 10yr down 1.8bps at 4.366

11:21 AM Slightly friendly lead-off ahead of Fed.  MBS up 6 ticks (.19) and 10yr down 3.3bps at 4.351

02:15 PM Almost no reaction to Fed so far.  MBS up an eighth and 10yr down 1.5bps at 4.369

03:22 PM A bit of weakness during press conference, but leveling off now.  MBS still up 1 tick (.03) and 10yr up less than 1bp at 4.386

Privatizing Fannie Mae and Freddie Mac risks a return to the kind of perilous mortgages that helped cause the global financial crisis unless regulatory safeguards are kept in place, an affordable housing nonprofit said in a paper on Tuesday.

Prior to this development, the CFPB was the sole industry participant to publish an average prime offer rate index on a weekly basis.

The closed meeting between the Federal Housing Finance Agency, the Treasury, and the Securities and Exchange Commission is the first since 2017.