How about those junk emails that start off with, “I’m not going to waste your time.” It already wasted my time. Is it a waste of time paying attention to what government officials say, or schedules that they give? Trelix’s Brett Parker noted, “Last year some in the industry were saying, ‘Stay alive until ‘25’ but now it could be ‘Stay in the mix until ‘26’.” Last week, no sooner did FHFA Director Bill Pulte say that 2026 could very well be the year that serious strides are made toward privatizing Freddie Mac and Fannie Mae (i.e., removing them from their 2008 conservatorship status) than a day or two later Donald Trump said that plans are underway. The “Oh, that’s just Trump being Trump” doesn’t quite fly in this case, given the Agencies role in the U.S. housing market and trillions of dollars of outstanding mortgage-backed securities. (More below.) (Today’s podcast can be found here and this week’s is sponsored by Calque. Calque provides a binding backup offer on your borrower’s departing residence to clear the existing mortgage balance and closing costs in 48 business hours or less. And it costs less than other buy before you sell solutions. Hear an interview with Closed Title’s Kaylin Edwards on being a young person in the industry, what it’s like working on the escrow side of things, and the latest in the title space.) Software, Products, and Services for Lenders and Brokers Join ICE today for its monthly Mortgage Monitor webinar where you’ll gain critical insights into U.S. housing and mortgage market trends. The information presented in this preeminent, widely attended monthly webinar is based on the most current data available from ICE’s vast mortgage, housing, and property data assets, including the largest servicer-contributed loan-level database in the industry. Learn how borrower demand, housing affordability, interest rates, available equity, and other factors may impact your lending strategies. Register for the complimentary webinar which will be hosted today from 2 – 3 p.m. ET.

We have a primer in the MBS Live knowledge base regarding the potential for overnight news and bond trading to give a completely different impression of how the following day will eventually trade: Overnight trading makes no guarantees.  This seems applicable today.  Last night, markets began moving in one direction on news that a U.S. trade court “blocked” Trump tariffs. Now this morning, markets moved all the way back in the other direction, even before econ data came out.  Yes, there are times when big overnight headlines result in a logical move that is sustained the following day.  This is just not one of those times.  Bond traders are under no illusions that the court ruling will have a lasting impact on tariff policy.  Morning econ data added to the reversal with weaker claims and GDP garnering a small reaction.

In addition to continued claims coming in at the highest level since 2021, weekly initial claims have been drifting just slightly above their recent precedent, even after accounting for seasonal adjustment distortions.  This isn’t really news yet, but traders are watching for signs of a divergence from the typical annual path.  Even then, they’ll consider the lesson from 2024’s summertime spike and not get too carried away based on one data set. 

While overall investor purchase activity is returning to pre-pandemic norms, interest in condo units dropped to a 10-year low, as insurance and fees surged.

The yield on 10-year benchmark Treasuries was up about three basis points following Wednesday’s sale, after earlier climbing more than five basis points.

During its meeting last month, some members of the Federal Reserve’s monetary policy committee expressed concern about persistent supply chain disruptions while others were confident price growth would be constrained.

While mortgage originations increased, borrowers focused their attention on big-ticket items, as credit account balances flattened overall, Vantagescore said.

While more consumers claim they can’t tell whether now is a good time to purchase a home, over half of prospective buyers said the market is better than it was in 2024.

Minimal Movement Amid Absence of Data

It was ultimately a fairly uneventful session for bonds with the 5yr Treasury auction serving as a “sell the rumor, buy the news” event.  In other words, traders were net sellers before the auction and then waded back into the market afterward.  The wading wasn’t as pronounced as the selling, but the net effect was negligible. Fed Minutes played no notable role in volatility. From here, tomorrow’s 7yr auction can play a similar role, but there will be more economic data to digest (both tomorrow and especially Friday). The dark horse market mover may end up being month-end trading, which can create significant swings for apparently no reason at all.

Market Movement Recap

09:38 AM Roughly unchanged overnight and weaker since 9am.  MBS down almost an eighth and 10yr up 3bps at 4.476

01:11 PM Slight bounce after 5yr auction, but still down almost an eighth in MBS and still up 3.4bps in 10yr yields at 4.479

02:26 PM No reaction to Fed Minutes.  MBS and Treasuries both right in line with previous update.

Overheard in the hallways at last week’s MBA conference: “At my age, instead of a condom I carry a moist towelette in my wallet. At my age, I run into buffalo wings far more often than sex.” There is always news in our biz (like rumors of Guild and Bayview, layoffs at nCino), but the industry, age jokes aside, continues to talk about the topics that were discussed last week. A fair amount of talk suggests that Freddie and Fannie’s influence and market share is waning and moving to non-QM investors with their “can do” attitudes, although both F&F are still relevant. Fannie Mae, for example, will announce a new initiative to combat mortgage fraud in the U.S. housing market this morning. Freddie Mac recently reported that repurchases are steady. It is generally agreed that market conditions are tough, although when surveyed, 18 public builder CEOs maintain an optimistic long-term outlook for the new-home market despite a slower-than-typical spring selling season and muted traffic in the first quarter. (Today’s podcast can be found here and this week’s is sponsored by Calque. Calque provides a binding backup offer on your borrower’s departing residence to clear the existing mortgage balance and closing costs in 48 business hours or less. And it costs less than other buy before you sell solutions. Hear an interview with HomeLight’s Nick Friedman on how lenders are navigating a challenging market shaped by recession fears, rising tariffs, buyer hesitation, and the resurgence of creative tools like buydowns and seller concessions to keep deals moving.)

After starting the holiday-shortened week on a positive note yesterday, bonds are already circling the wagons and encountering some resistance. This doesn’t necessarily kill the notion of a supportive ceiling overhead, but it does confirm the broader, persistent reality: bonds will need a compelling reason for sustained improvement.  This could take the form of exceptional weakness in economic data, surprisingly tame inflation, or the seemingly impossible accomplishment of lowering Treasury issuance via fiscal policy. As for today, bonds are moving to the sidelines ahead of the 5yr Treasury auction.  There also looks to be some front-running of month-end rebalancing with risk parity trading hitting both stocks and bonds at 9:30am.