A bipartisan group of representatives co-sponsored the bill, aiming to make permanent and expand eligibility for a deduction previously offered for 14 years.

The deal has an extensive capital structure, which is expected to repay investors sequentially, with notes enhanced by subordination.

As tariff turbulence continues, BofA is predicting a slowdown, not a downturn. But America’s second-largest bank is also signaling that it’s prepared for a more severe scenario.

The agency is seeking input on how to better open up industries up to new entrants. Some see this opening the door to more competition for banks.

Here in San Diego at the CU:REALM event, Cotality’s Chief Economist Dr. Selma Hepp noted that consumer and business sentiment has already dropped and that has led to less spending. Less spending leads to a slower economy and lower rates, which is good, but nervousness has crept into consumer’s thinking and, given that 70 percent of U.S. GDP comes from the consumer, estimates of improving gross domestic product have vanished. Yet Cotality believes 30-year mortgage rates will chop around the 6 percent range this year and next. Another impact that the Trump Administration is having on lenders is in the regulatory arena. On today’s Regulation Central the panel of legal and regulatory experts is joined by former CFPB attorney Richard Horn. The recent filing by the CFPB to unwind the Townstone consent order has raised a lot of eyebrows and questions about fair lending enforcement going forward. Mr. Horn was one of the attorneys that represented Townstone. Other topics will include the state of fair lending, Townstone, and what in the heck are those CFPB people doing now. (Today’s podcast can be found here and this week’s are sponsored by BeSmartee, transforming mortgage lending with Bright Connect, its native mobile app designed to boost loan officer productivity, speed up referrals, and simplify the borrower experience. Interview with BeSmartee’s Tim Nguyen on how evolving economic pressures, borrower expectations, and advances in AI are reshaping point-of-sale solutions, redefining the role of loan officers, and unlocking new opportunities to streamline the mortgage experience.)

Financial markets experienced relatively extreme volatility on several occasions following the April 2nd tariff announcements. The bonds that underlie mortgage rates were no exception, thus pushing rates higher at one of the fastest weekly paces in years.  Things have been calmer so far this week, with the first two days looking more like a typical highly active trading day from before the tariff announcement.  Both the mortgage bonds and mortgage lenders appreciate lower volatility. It is especially appreciated at the moment because it is taking bonds back toward their previous range.   The average lender had already moved top tier 30yr fixed rates back under 7% yesterday. Today simply added to the momentum.   Despite the friendly move and the relative calm, this still isn’t an environment where it makes sense to take anything for granted in terms of today’s rates being available beyond the present day.

Absence Makes the Bonds Grow Stronger

Bonds improved at a moderate pace for the 2nd day in a row, thus marking the first sustained push back against the recent rate spike.  The gains are notable because they are not being driven by any big, new developments on the trade/tariff front. Instead, it is the absence of any such developments that is allowing the market to get back into a relatively calmer groove.  That said, we wouldn’t take the calm for granted.  Bonds have merely moved back to more nimble territory as we wait for more policy clarity.

Econ Data / Events

Import Prices

-0.1 vs 0.0 f’cast, 0.2 prev

Export Prices

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NY Fed Manufacturing

-8.1 vs -14.5 f’cast, -20.0 prev

Market Movement Recap

10:16 AM Choppy, sideways, but slightly stronger overnight.  MBS up 3 ticks (.09) and 10yr down about half a bp at 4.367

01:04 PM Gains continue.  MBS up a quarter point and 10yr down 5.5bps at 4.32

03:13 PM Down an eighth from the best levels of the day, but still up 5 ticks (.16). 10yr down 4bps at 4.333, but up a few bps from best levels. 

04:34 PM Avoiding further weakness this afternoon.  MBS up 5 ticks (.16) and 10yr down 4.4bps at 4.33

In the context of the past two weeks, the past two days have been an anomaly. Not only have bond yields been moving lower, but they’ve done so in relatively lower volatility and without the same sort of high-impact headlines seen with last week’s 90 day tariff pause. The market is moving into a more uncertain, inquisitive position now that we’re through the initial barrage of tariff-related volatility.  What will the final numbers be? What countries will be involved? What will “deals” look like? What will be exempted? And lastly, what will the international response be to all of the above?  Short of a rapid re-acceleration of tariff drama, we’re in “wait and see” mode with a focus on the questions outlined above.

While not directly correlated to bond market movement, currency valuation has been a good proxy for the global market response to April 2nd and the subsequent updates.  In the chart below, lower = weaker for the dollar.

Bessent reiterated his interpretation of the decline being mainly a product of deleveraging, saying he had no evidence that sovereigns were behind the drop.

The Buffalo, New York-based bank also said Monday that the commercial real estate lending market has started showing signs of life, but that the renewed competition is crimping its loan growth.