The digital lender also agreed with a former executive to drop her lawsuit accusing the company of misleading investors.

Also, Hometap boosts capital markets unit with Wells Fargo alum, while Planet Home, A&D Mortgage, National MI and Mobility Market Intelligence all find new chief financial officers.

For the first time since the Federal Reserve started raising short-term rates two years ago, the number of home purchase mortgages locked rose on an annual basis, Optimal Blue found.

What You See Today Won’t Necessarily Be What You See Tomorrow

With essentially nothing on the event calendar to start the new week, it was fair to expect a continuation of the same sideways drift that characterized last week.  It’s not the future can ever be predicted when it comes to markets, but we can say the flat trajectory is the least surprising outcome for Monday.  That same trajectory will be increasingly surprising over the next 2 days, with a special focus on Wednesday (CPI day).  Even Tuesday deserves some respect with the Producer Price Index and a moderated discussion from a European banking conference with Fed Chair Powell. Today’s Fed-speak wasn’t worth any volatility, but the NY Fed’s consumer survey showed an uptick in inflation expectations and made for a modest intraday bump at 11am ET. 

Market Movement Recap

10:01 AM Sideways to slightly stronger overnight. Additional modest gains early.  10yr down 2.8bps at 4.47.  MBS up 5 ticks (.16).

01:14 PM Small pop toward weaker levels after Fed inflation survey, but back toward better levels now with 10yr down 2.4bps to 4.474.  MBS up 5 ticks (.16).

03:18 PM Weakest levels of the afternoon.  MBS still up 2 ticks (.06) but down nearly an eighth from the highs.  10yr still down 1.1bps, but at the highs of the day, 4.487.

04:22 PM Off the weakest levels.  MBS up 3 ticks (.09) and 10yr yield down 1.2bps at 4.486

Last Thursday, mortgage rates merely had to hold steady in order to hit 1-month lows.  In other words, Wednesday’s rates were low enough to earn that distinction, but it technically hadn’t been a full month since rates were decisively lower.   All that to say, not much has changed since last week when it comes to mortgage rates, but with today’s levels being just microscopically better than last week’s, we’re technically at 1-month lows yet again.   The underlying market movement was calm and boring today.  That is increasingly likely to change in the coming days due to incredibly important economic data on each of the next two mornings. In other words, whereas it was safer to expect small changes and sideways momentum over the past 5-6 days, it would be a surprise to see things stay flat by Wednesday.   The only catch is that no one knows which direction rates will move when they (probably) have something other than a flat, boring day in the next two days.

Ahead of the upcoming MBA conference in Manhattan, as a reminder, we have five senses. All of them are important, with perhaps smell being the most under-rated. Hotel chains are very cognizant of this, and here’s how hotels smell their best. It is also worth a reminder that secondary and capital markets folks are not fans of rate volatility. They are fans of environments where requests for extensions or renegotiations are not filling their inboxes… or hitting their P&L. Cap markets personnel use generic mortgage-backed securities to hedge pipelines. Would it be a mortgage-backed security without mortgages backing it? Would it be olive oil without olives, or canola oil without canola? (This question doesn’t work with baby oil.) Would it be a Swiss Army Knife without a blade. Thank you to Indiana’s Carol K. who sent the latest invention: A Swiss Army Knife without the knife so that people can travel with it on a plane. What’ll they think of next? Luggage with wheels? Yowza! (Found here, this week’s podcasts are sponsored by LoanCare. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Vesta’s Mike Yu on current technology capabilities and adoption within the mortgage industry.) Lender and Broker Software, Products, and Services

In 2023 and especially 2024, the first bullet point in the bond market’s job description is to focus on Core CPI above all other economic reports.  In fact, it’s not uncommon for a big CPI reaction to set the tone with traders largely waiting for the next CPI before making the next big move.  In February and March, negative reactions to CPI set the high end of the prevailing yield range.  That might have happened again in April if not for the additional bump from the extra strong Retail Sales data a few days later, and Powell’s hawkish pivot a day later.  Even so, the April 10th CPI stands out as the biggest recent market mover, by far.  There’s no reason to doubt a repeat performance is in the cards if the results come in very much outside the consensus.  Monday is quiet on the data front.  Things get progressively more serious after that with Tuesday’s PPI being an opening act for Wednesday’s CPI.

Higher Inflation Expectations Keep Yields Range-Bound

It’s not as if bond yields stood any real chance of breaking outside the week’s prevailing range based on today’s starting point, but by losing a modest amount of ground, they ended up staying even closer to the 4.50% psychological level ahead of next week’s big CPI revelation.  Today’s driver was the Consumer Sentiment data.  While the headline was weak (which would be good for bonds, all other things being equal), the inflation expectation component got the market’s attention, pushing yields higher and stocks lower after 10am.  The selling was brief and the afternoon was on cruise control at modestly weaker levels.

Econ Data / Events

Consumer Sentiment

67.4 vs 76.0 f’cast, 77.2 prev

1yr inflation expectations

3.5 vs 3.2 prev

5yr inflation expectations

3.1 vs 3.0 prev

Market Movement Recap

10:24 AM Moderately weaker overnight and no help from sentiment data.  MBS down 5 ticks (.16) and 10yr up 4.1bps at 4.497

11:25 AM A bit of additional weakness as MBS get caught up with TSY losses.  10yr still up just over 4bps at 4.498, but MBS now down 7 ticks (.23).

03:44 PM Losses cooled down by 1pm. Sideways and stable since then.  MBS down 6 ticks (.19) and 10yr up 4.7bps at 4.503

In general, you should be skeptical any time someone says a future week will be more volatile. There’s really no way to know such things in advance, but this time is an exception. While we can’t have any idea which  direction rates will move next week, we can be sure that we’ll see more volatility.  Part of the reason is that the outgoing week would have been hard pressed to be any less volatile.  For rates, it was largely an aimless drift apart from two offsetting reactions to calendar events on Thursday and Friday (highlighted below). Thursday’s sharper drop in bond yields followed a higher reading in the weekly Jobless Claims data.  This was one of the only economic reports that came out this week.  It showed an abnormally large change that resulted in the highest reading since August 2023.  While this could prove to be an outlier, it got the market’s attention in the morning. Thursday afternoon saw relatively strong at the scheduled auction of 30yr Treasury bonds.  In general, strong auctions put downward pressure on yields/rates, all other things being equal.  The present example was worth roughly the same amount of improvement as the Jobless Claims data. While the bond market was already pushing back in the other direction on Friday morning, the Consumer Sentiment data kept things moving in the same unfriendly direction.  This was not the usual case of stronger economic data pushing rates higher.  In fact, headline consumer sentiment was much lower than expected.

The following should be prefaced with the reminder that it is impossible to predict the future with much precision when it comes to bond market movement.  That said, there are times when certain outcomes are far less surprising than others on any given day or week.  For the current week, that base case involved a flat trajectory with lower volatility than the previous week, and that’s exactly what we’ve seen.  This is also an entirely reasonable outcome given the extreme absence of economic data and other big ticket market movers.