May continues to be a more volatile month than the bulk of April when it comes to day over day mortgage rate movement. While the average day has seen that volatility play out in favor of higher rates, today was thankfully the opposite.  Yesterday’s latest levels left the average lender at 6 week highs with a top tier 30yr fixed rate of 6.57. The underlying bond market was already beginning to recover yesterday afternoon. Combined with additional, modest bond market improvement overnight, today’s 30yr fixed rate fell to 6.52% on average. The Iran war remains the primary source of volatility for markets. Some analysts expect more traction on a peace deal to come out of Trump’s meeting with Xi (which will continue into tomorrow). This is far from a given, but if it happens, it would almost certainly put additional downward pressure on rates.

A recovery toward lower oil prices paved the way for the bond market to recover yesterday morning’s weakness and the same theme continued in the overnight session. 8:30am econ data represented a modest risk of volatility, but with Jobless Claims slightly higher and Retail Sales right on target, there was almost no detectable trading response. With that, we head into the rest of the session with markets on the lookout for any meaningful war-related headlines. More than a few hot takes are expecting the Trump/Xi meeting to yield some sort of breakthrough with respect to the war, but it’s probably best to be pleasantly surprised if it happens (rather than actually planning on it happening).
Interesting bigger picture perspective: If we look past the covid-inspired volatility, Retail Sales have actually been in the same long-term trend that began after the 2008 financial crisis.

Good to know: You may see mention of surging import prices attributed to the Iran war, and while it’s true that petroleum import prices have spiked over the past 2 months, the initial pop in the chart happened in February and was attributable to capital goods and industrial materials. Also interesting is that industrial goods accounted for more of this month’s spike than petroleum, albeit just barely.

Serious delinquency transitions in older mortgages inched up, hinting at the impact of an FHA rule change’s impact in conjunction with other stressors.

Restricting institutional investors is bad policy, but reforming 1031 exchanges and requiring public listings for HUD homes could boost affordability, according to the Chairman of Whalen Global Advisors.

While not looking to take on UWM and Rocket, GO Mortgage CEO Jay Promisco said mortgage brokers want and need more options for their production.

The Senate voted 54-45 to confirm Kevin Warsh to lead the central bank. Warsh will take the reins from Jerome Powell, who said he will remain on the Federal Reserve Board.

Built around the company’s guidelines, Rezi Mortgage Assistant helps borrowers learn about the lending process on their own terms, Newrez executives said.

MBS Fully Recover After Initial Reaction to Inflation Data

There’s no question that this morning’s PPI data hit the bond market. The volume spike was easily higher than that seen with yesterday’s CPI and the market movement left nothing to the imagination. In the big picture, a few bps of weakness in bond yields isn’t that alarming, but if we consider PPI isn’t usually a big deal and that yields were already pushing recent highs, things begin looking more meaningful. Despite the initial reaction, bonds found their footing after 11:30am. 10yr yields made it almost all the way back to pre-data levels and MBS fared even better–ultimately turning green around 2pm. 

Econ Data / Events

Core PPI m/m (Apr)

1.0% vs 0.3% f’cast, 0.1% prev

Core PPI y/y (Apr)

5.2% vs 4.3% f’cast, 3.8% prev

PPI m/m (Apr)

1.4% vs 0.5% f’cast, 0.5% prev

PPI y/y (Apr)

6.0% vs 4.9% f’cast, 4% prev

Market Movement Recap

08:38 AM MBS down 3 ticks (.09) and 10yr up 3.2bps at 4.484

11:39 AM MBS down an eighth and 10yr up 3bps at 4.483

02:16 PM Nice bounce for MBS, now back to + 1 tick (.03) on the day. 10yr still up 2.7bps at 4.48

The Producer Price Index (PPI) is much more volatile and, on average, much less of a market mover than the Consumer Price Index (CPI), but occasionally, it swings for the fences. Today’s release is a clear example with the monthly headline coming in at 1.5 vs 0.5 forecast. In annual terms, headline inflation is a whopping 6.0% versus a 4.9% forecast–up sharply from last month’s 4.3% (itself upwardly revised from 4.0%). This is easily the most onerous spike since the pandemic. Even though PPI hit the market harder than CPI, that’s not saying much. Bonds are only 2bps weaker at 10am ET–a testament to how little this data tends to matter.

The April FOMC Meeting concluded with the Fed leaving interest rates unchanged, and it was the last under Jerome Powell’s chairmanship. Chair Powell is the first Fed Chairman to step down and remain on the Board since 1948 due to a) the Federal investigation regarding the cost of renovating the Fed’s Headquarters, and b) he probably wants to have a voice in keeping the Fed independent from presidents. Kevin Warsh is slated to be the next Fed Chairman, taking the helm on May 15th, and at this point most expect no changes from Fed policy until 2027. (Today’s podcast can be found here and this week’s ‘casts are sponsored by nCino, and its Mortgage Suite that supports a modern homeownership journey. This week at nSight 2026, mortgage leaders will explore how AI, intelligent automation, and connected experiences are reshaping lending operations and borrower engagement. Hear an interview with nCino’s Chris Gufford on how AI is moving beyond hype to deliver measurable gains in mortgage operations, borrower experience, and loan officer productivity, while reshaping how forward-looking lenders reengineer their processes for the next phase of industry transformation.) Lender and Broker Products, Software, and Services A tailored suit fits because it was designed for you, not handed to you off the rack. Floify takes the same approach to the mortgage POS: configurable to how you actually lend, so LOs do more with less because the intelligence is already inside. Your loan types? Configured without code, no dev queue, no vendor delay. Built in. Your borrower data? Extracted, validated and pre-filled before an LO ever touches the file. Built in. Your workflows? Moving loans forward automatically, no manual nudges required. Built in. The result is an 84 percent increase in efficiency and loans reach clear-to-close 7.5 days faster across any loan type your team can dream up. Is your POS tailored for you, or are you the one making alterations to fit it? See it live. Your way. Built in. Ready when you are.