It was a fairly boring day on what has turned out to be a fairly boring week so far for mortgage rates.  After Friday’s larger spike, we’ve seen a microscopic recovery on each of the past 2 days. In terms of specific index levels, this equates to a 0.04% drop in the top tier 30yr fixed rate for the average lender.  This is roughly one third of the minimum increment that separates typical mortgage rate offerings.  In other words, it isn’t a huge move by any means.  Tomorrow brings the release of the Consumer Price Index (CPI)–an economic report that has occasionally resulted in huge changes in mortgage rates. As a key measurement of inflation, CPI has been critically important at times when the market sought clarity on potential shifts in the inflation narrative. At present, however, the market is waiting a number of months before drawing any firm conclusions on inflation due to tariffs and trade deals that have yet to be finalized.  Even then, it will take a few months for those policy changes to flow through to the data. None of the above means that CPI is a complete dud.  The market can certainly still react, but the bar for true drama is higher than normal.  In other words, CPI would need to come in much higher or lower than forecast to have a big impact on rates.

No Drama Today. How About Tomorrow?

After a slightly bumpy start for reasons that remain unknown, the bond market settled into an uneventful sideways grind that lasted through the 3pm CME close. Both MBS and Treasuries were effectively unchanged and the latter didn’t give a second thought to a fairly weak 3yr Treasury auction. Trade headlines were less than meaty, but talks between the US and China are now said to potentially move into a 3rd day. That means tomorrow’s calendar will be shared between trade-related headlines, a 10yr Treasury auction (more relevant than the 3yr) and CPI data. As far as this week is concerned, this is as action-packed as we’ve seen the calendar, although that’s not saying too much given prevailing sentiment toward inflation data.  Specifically, the market cares more about how it looks several months from now.  It’s not that it can’t have an impact, but it would likely be dulled by the caveats.

Market Movement Recap

09:35 AM Modestly stronger overnight and little-changed so far.  MBS up 1 tick (0.03) and 10yr down 2.1bps at 4.454

01:08 PM No reaction to 3yr auction.  MBS down 1 tick (0.03) and 10yr unchanged at 4.474

03:09 PM Stocks rise on trade talk comments, but bonds mostly holding.  10yr unchanged at 4.474 and MBS down 1 tick (0.03).

Covius’ title services had focused on the needs of firms involved with defaults, but this acquisition from Blend pushes the shift to originations forward.

A consent order issued by Washington against mortgage brokerage Xpert Home Lending accused the firm of violating the state’s consumer protection law.

A forthcoming bill from Sens. Jim Banks, R-Ind., and Catherine Cortez Masto, D-Nev., would allow the Federal Housing Finance Agency director to set limits on executive pay at the Federal Home Loan banks.

While Fannie Mae sees improving buying and selling conditions, more consumers still think prices will rise over the coming year.

A new executive order reverses digital ID initiatives, fraud alerts and federal data-sharing plans from which banks stood to benefit.

For the next several days I am in Florida, in mortgage meetings and the MBAF, and in Saturday’s Commentary I noted the intense flurry of conference activity this week and last (“the MBA’s Chairman’s Conference, New Jersey MBA, the MBA Florida, EPM TAG, MISMO Spring Summit, The Gathering…). One continuing theme, to varying degrees, is conjecture about Freddie Mac and Fannie Mae, and their role in lending. By many accounts, the Agencies are “driving 10 mph in the fast lane.” A focus on ending their conservatorship, which conference goers were told by FHFA Director Pulte last month in New York, would begin in earnest in 2026, apparently has moved to… “now.” (More Agency news below.) A key issue continues to be whether the government’s role in the future will include an explicit or implicit guarantee if we see another 2008. It would be helpful if it minimized the impact on Agency rates, because those rates have a ripple effect through other mortgage products. Our MBA will be focused on educating regulators and Congress about this, since most were not around during previous attempts at removing them. (Today’s podcast can be found here and this week’s are sponsored by Flyhomes. The Flyhomes Guaranteed Backup Contract, available in all 50 states, gives borrowers a bona fide purchase agreement on their departing residence, helping them exclude that mortgage from DTI calculations and remove the home sale contingency when buying their next home, all in under 24 hours. Hear an interview with First American’s Odeta Kushi on why Americans are staying in their homes longer than ever, the economic and policy forces behind this trend, and what it means for the future of housing mobility and market recovery.)

As hoped, Friday’s big rate spike did not carry additional momentum into the new week.  This is occasionally a risk when rates are responding to big surprise in the jobs report, but slightly less of a risk when the other economic data had been weaker.  All that having been said, it’s not as if we’re seeing a triumphant return to last week’s lowest levels.  Rather, it’s more of a solid show of support at Friday’s higher levels with a very modest bounce.  In terms of our 30yr fixed rate index, the improvement is 0.02%.  There were no significant economic reports or news headlines to inspire volatility, although afternoon headlines regarding progress on trade talks with China may have resulted in bonds losing some ground. All else equal, when bonds lose enough ground, mortgage rates move higher, but today’s afternoon losses were too small to trigger a reaction among mortgage lenders.

Gentle Rally Gently Reverses After Trade Headlines

First thing’s first: bonds closed in stronger territory and retained most of the gains that were present in the AM hours.  But they would have done just a bit better if not for a handful of newswires that hit around 2:30pm ET regarding vaguely positive comments on US/China trade talks (i.e. BESSENT ON US-CHINA TALKS: ‘GOOD MEETING’). This preceded a move up to 4.487 from 4.470 in 10yr yields–barely worth mentioning in the bigger picture, and only mentioned here to reinforce the market’s willingness to react to trade-related headlines and because US/China talks will be continuing on Tuesday.

Market Movement Recap

09:53 AM Sideways overnight and inching into positive territory after 9:30am NYSE open.  MBS up 3 ticks (.09) and 10yr down 1.3bps