The average mortgage lender remained right in line with yesterday’s levels despite a bit of weakness in the bond market.  Lenders who improved their rates yesterday afternoon were slightly higher.  Others were slightly lower.  This is a solid outcome considering the market motivations over the past 2 days.  Specifically, rates moved in concert with stocks yesterday as NVDA led a substantial sell-off.  Stocks bounced back today, and have now recovered most of the damage from yesterday morning.  Rates, meanwhile, haven’t followed the correction today. The 2nd half of the week bring a higher concentration of calendar events with the potential to influence rates. At 2pm ET, the Federal Reserve releases its latest rate announcement. There is effectively no chance of a rate change at this meeting, nor is it likely the Fed would change much about the statement itself. That leaves Powell’s 2:30pm press conference as the sole source of potential volatility in the afternoon. On that note, this is one of those Fed meetings where it wouldn’t be a surprise to see a minimal reaction even though one should never rule out a bigger reaction on a Fed day. 

Both S&P Case-Shiller and the FHFA released national home price indices this morning. In both cases, November’s prices were slightly higher than expected.  For the Case Shiller data, this meant that prices declined less than expected. Unlike FHFA prices, Case Shiller is NOT seasonally adjusted–something that is immediately apparent when viewing a month-to-month chart. November is frequently near the low point of any given year for price appreciation. This month’s 0.1% decline is an improvement from October’s 0.2% decline or the 0.3% drop from last November. Regionally, Boston and New York were top performers in November, but only NY and Chicago were over 6% year over year. As seen in the table above and the chart below, prices are easily in positive territory in year-over-year terms.  The same is true for FHFA, which is seeing almost the exact same change as Case Shiller.  In addition, both indices have been fairly flat in the low 4% range recently.

Not Expecting Fireworks From The Fed

Bonds had a mixed reaction to this morning’s Durable Goods data with stronger internals offsetting a weaker headline. Sellers were in control for most of the AM hours, but momentum shifted with the 7yr Treasury auction. All in all, it was a solid showing in spite of the rebound in equities markets (something we only care about today because it was a huge consideration yesterday). Looking ahead, tomorrow’s only notable agenda item is the Powell press conference at 2:30pm. The announcement itself can’t really offer any tradeable news.  Even Powell would be hard pressed to shake things up too much considering the mildly positive cue from inflation data and the ongoing policy uncertainty as a counterbalance.  That said, one can never truly rule out a volatile reaction to a Powell presser, but the odds are certainly lower this time around.

Econ Data / Events

Durable Goods

-2.2 vs 0.8 f’cast, -2.0 prev

Durables excluding defense and aircraft

0.5 vs 0.3 f’cast, 0.9 prev

Consumer Confidence

104.1 vs 105.6 f’cast, 109.5 prev

Market Movement Recap

08:41 AM Slightly weaker overnight and little-changed after Durable Goods data.  MBS down 2 ticks (.06) and 10yr up 2.8bps at 4.566

10:57 AM Back near weakest levels as stocks rebound.  MBS down an eighth and 10yr up 3.5bps at 4.574

01:43 PM Stronger after 7yr Treasury auction.  MBS unchanged. 10yr up 1.6bps at 4.554

Bonds were weaker overnight as markets calmed down a bit after yesterday’s DeepSeek frenzy.  The 8:20am CME open brought in just a bit of buying, but there’s been better selling since the 8:30am Durable Goods data.  The -2.2 vs 0.8 f’cast might look like a good outcome for bonds at first glance, but Durable Goods is a notoriously volatile report at the headline level due to major expenditures in certain sectors. That’s why there’s a separate component line item for “non-defense capital goods orders, excluding aircraft.”  Think of it like “core” durable goods.  Bottom line, the core is offsetting the headline, and causing bonds to move back to the weaker opening levels.

“Last year I joined a support group for procrastinators. We haven’t met yet.” Lenders and vendors are certainly meeting here in Austin. What’s going on out there? There’s endurance. Congratulations to my son Robbie as today is his 1,000th podcast, the link to which is posted at the bottom of every opening paragraph. (What have you done, workwise, 1,000 times?) There’s innovation. There’s Praxis Lending Solutions, newly launched, focused on workflow redesign, tech assessment, and customer experience. There’s education. On today’s episode of Mortgages With Millennials, Kristin Messerli and Robbie Chrisman welcome a couple of potential first time home buyers to ask them about their home search as it pertains to working with a lender and the customer experience. There’s customer service. Want to do a client with a high credit card balance (and paying 28 percent on it) a favor? Of course you want to put them into a cash out refi, but if that doesn’t work, for $1 have them join American Consumer Council which gives them access to membership in normally off-limit credit unions. Some, like UFCU in Austin, will accept transferred balances into an account where the rate can be only 9.9 percent. Hmmm… 9.9 versus 28. (Questions can be directed to UFCU’s Michael Jones.) (Today’s podcast can be found here and this week’s is sponsored by Figure. 50 percent of the top IMB’s use them, and if you haven’t examined your HELOC/HELOAN strategy recently, it’s time to get on it. Hear an interview with Polunsky Beitel Green’s Peter Idziak on the various executive orders Trump has issued since he entered office and their potential impacts on the housing industry.)

Fannie Mae and Freddie Mac’s stock were downgraded to “underperform” by KBW as they are currently priced above its expectations.

Sales rates, as well as bid-to-ask spreads at foreclosure auctions both showed signs of increasing demand from November to December, according to research.

The market is watching to see how investors handle any market dislocations that arise as elected leaders look to reform the government-sponsored enterprises.

The final vote was 68-29 in favor of Senate the confirmation of the billionaire hedge fund manager.

The nation’s largest homeowners insurance providers imposed rate hikes in double-digit percentages last year, led by Farmers’ 53.5% increase in Maryland.