July’s growth in products correspond with a noticeable rise in new applications for adjustable-rate mortgages as borrowers respond to recent rate movements.

The New Jersey-based Anniemac, which has expanded down the East Coast in recent years, touted the incoming team’s construction lending experience.

Bonds Eventually Pass on Decisive Reaction to Tuesday’s Data

Right at the 8:30am release time, bonds rallied on core CPI almost perfectly hitting unrounded forecasts (.32 vs .31). Additionally, the 2.7% vs 2.8% annual headline number was another step in the right direction. As markets digested the internals, the “yeah but” trading emerged.  “Yeah buts” included supercore CPI (core services excluding housing) rising to 0.481 vs 0.212 month-over-month and evidence of the tariff impact via the highest annual core goods inflation since June 2023.  So on one hand, declines in housing related inflation are finally helping keep the number down while other categories are pushing back in the other direction, keeping the broader numbers a bit stubborn.  The mixed data and mixed market reaction place even more emphasis on the next jobs report when it comes to informing the next big move for rates.

Econ Data / Events

m/m CORE CPI (Jul)

0.3% vs 0.3% f’cast, prev 0.2%

m/m Headline CPI (Jul)

0.2% vs 0.2% f’cast, prev 0.3%

y/y CORE CPI (Jul)

3.1% vs 3% f’cast, prev 2.9%

y/y Headline CPI (Jul)

2.7% vs 2.8% f’cast, prev 2.7%

Market Movement Recap

09:30 AM Initial rally followed by a sell-off after CPI.  10yr up 1.7bps at 4.302.  MBS still 3 ticks (.09) higher on the day, but post-CPI gains are erased.

10:50 AM Off the weakest levels.  10yr up 1.3bps at 4.296 and MBS up an eighth of a point.

01:49 PM Turning out to be fairly uneventful.  MBS up 5 ticks (.16) and 10yr up 0.7bps at 4.292

04:30 PM Strongest levels since the post-CPI selling. MBS up 6 ticks (.19) and 10yr nearly unchanged at 4.287

There’s something for everyone in this morning’s CPI data. The monthly headline was on target at 0.2 vs 0.2. Same story for the core at 0.3 vs 0.3. Bonds are just a hair stronger, but it’s hard to make a case that they should be based on other internals:

The unrounded monthly core was 0.322 versus the median big bank forecast at 0.31
Supercore (core CPI excluding housing) was 0.481 vs 0.212 previously
Core goods (tariff sensitive) is now 1.2% year over year – highest since June 2023

All these bullet points argue for bonds to be selling off today and likely justify the backpedaling in the initial rally.  Bonds are still modestly green on the day, but right in line with yesterday’s range. It wouldn’t be a surprise to see gains continue to erode as markets digest the implications.

“Nothing refreshes my memory about what I need at the grocery store like coming home from the grocery store.” Remember adjustable-rate mortgages? Here at the California MBA’s Western Secondary, talk in the hallways is about memories of how, in the past, just because the Fed changes short-term rates doesn’t mean long-term rates move. Put another way, short-term rates impacting adjustable-rate mortgages may improve while 30-year mortgage rates barely budge. It will be one of the topics in today’s episode of Capital Markets Wrap at 3PM ET. The panel delves into the increase in ARM volume, anticipated IPOs of Fannie Mae and Freddie Mac, and discusses how upcoming changes at the Federal Reserve could shape future policy. They’ll also highlight the significance of the September Fed meeting and share takeaways from the Western Secondary conference. Yes, Bill Ackman, who controls a large block of Freddie & Fannie stock and who has the President’s ear, not only wants another issuance of stock but also to merge F&F. Will borrowers really be helped? Our business continues to watch what could be the likely resolution that will mark the final and most lucrative chapter of the 2008 financial crisis: a successful recapitalization and return to private ownership of Fannie Mae, to the hoped-for benefit of taxpayers, homeowners, and shareholders alike. (Today’s podcast can be found here and this week’s is sponsored by ICE. By seamlessly integrating best-in-class solutions, ICE optimizes every stage of the loan life cycle, setting the standard for innovation, artificial intelligence, efficiency, and scalability, and defining the future of homeownership. Today’s has interview with ICE’s Matt Dowd on the borrower decision-making process and strategies for guiding them from lead generation to closing, including how balancing automation with human touchpoints creates a seamless, trust-building experience.)

Pundits, politicians, and everyone else can continue to assume that mortgage rates will respond to changes to the Fed Funds Rate. Meanwhile the bonds that actually dictate mortgage pricing will continue responding to the most important economic reports. The two biggest examples are the monthly jobs report and today’s release of the Consumer Price Index (CPI). To be fair to those who are overly-focused on the Fed, there is a correlation between this data and the Fed’s decision-making process.  In other words, today’s rates were at risk of moving higher or lower for the same reasons that the Fed might be more or less likely to cut rates in September.  The Fed attempts to balance unemployment and inflation, in not so many words. Today’s CPI showed that inflation has yet to fall decisively enough to guarantee a rate cut. On the other hand, it didn’t rise enough to take a rate cut off the table. In short, CPI was mixed. Some components showed tariff impacts and a costlier services sector. Other components showed ongoing softening in major categories such as housing-related expenses. The odds of a Fed rate cut actually improved for September. Shorter-term bonds also improved (no surprise, as they are highly correlated with Fed rate expectations).  But longer-term bonds (which includes the bonds that dictate mortgage rates) held steady.  When this is the case, mortgage rates will almost always be roughly unchanged on the day.

As mortgage rates dip, more homeowners are turning to cash-out refis for quick access to cash, ICE says.

Second quarter earnings at the nation’s largest title underwriters, while mostly positive, were still affected by the rather weak purchase season this year.

Federal Trade Commission data shows scam losses for adults 60+ have skyrocketed, with banks under pressure to strengthen protections.

Centerbridge Partners’ acquisition of MeridianLink comes amid sluggish originations but rising demand for AI tools.