Bonds drifted steadily higher in yield during the overnight session with most of the weakness seen after European markets opened. The net effect was roughly 4bp increase in 10yr yields and an eighth of a point of weakness in MBS.  ADP data did no harm at 8:15am, but bonds stayed near opening levels during the first 2 hours.  Today’s marquis data–ISM Services–came out much weaker than expected.  That was all it took to spark a reversal that leaves 10yr yields almost 3bps lower heading into the PM hours.  The eighth point loss in MBS has turned into an eighth point gain.

My cat Myrtle never had to worry too much about things like… money. Elon Musk, however, can’t seem to catch a break and his $56 billion (yes, with a “b”) pay package didn’t fly. Attorney Brian Levy seems to have trouble taking the new Department of Government Efficiency (D.O.G.E.) to be headed by Elon Musk and Vivek Ramaswamy seriously. Find out why in his latest Mortgage Musings which you can also get delivered to your email box for free by subscribing here. Elon Musk’s name may be intertwined with that of the nominee for Secretary of Treasury (who will work closely with whoever heads up the FHFA, especially if Freddie and Fannie are, once again, sent down the path toward being released from conservatorship). Love Musk or hate Musk, whether dominating the roads with Tesla, space with Space X, the internet with Starlink, social media with X, or the brains of humans with Nuralink, apparently, his influence will impact the U.S. Government payroll. Valuations at Elon Musk’s SpaceX and xAI have soared since the election. The billionaire rocket builder plots a huge share sale while AI start-up closes in on $5 billion funding round. But Guy S. reminded me that the total payroll of the federal government is about $110 billion a year and Federal government spending is $6.1 trillion. You cannot meaningfully shrink the federal government by firing “unelected bureaucrats.” Stay tuned! (Today’s podcast can be found here and Richey May is sponsoring this week’s. Richey May’s consulting, cybersecurity, business intelligence, and automation services are designed by mortgage experts to help you continue to drive growth and increase profitability. Hear an interview with the Institutional Risk Analyst’s Chris Whalen on competition for a (potentially) private Fannie and Freddie, when the Fed will be forced to restart quantitative easing (QE), the yield curve under President Trump, and the latest on capital requirements.)

In a report Tuesday, credit bureau Experian predicted that government identity systems could get an update in the coming year. Here’s what else could happen.

Rocket Mortgage is also allowing customers to use automated valuation models in lieu of appraisal for loans up to $400,000.

The news comes weeks after the servicing fintech announced its latest venture capital raise.

In a wide-ranging interview, Tim Bowler, president of ICE Mortgage, discusses his views of the road ahead, the most crucial aspects of servicing distressed homeowners and why he took a mid-career role as an intern.

The Canadian bank fell short of analysts’ expectations on non-interest income partly because of a higher-than-anticipated tax rate. Scotiabank’s results also included a one-time impairment charge related to its investment in Bank of Xi’an Co. in China.

Friendly Fed Comments No Match For The Range

The day began with a bond rally courtesy of geopolitical headlines (martial law declared in South Korea). Traders were done reacting to the news by 9am and yields were heading back up after that with a 10am push from stronger JOLTS data. There were several friendly comments from Fed speakers in the early afternoon, but they only materially benefitted the short end of the yield curve (i.e. 2yr yields are lower on the day while 10yr yields are several bps higher). The other way to view the move is simply that the bond market rallied as much as it was willing to rally by the end of last week and yields haven’t been able to make any additional progress since then. Indeed, each of the past 3 trading sessions has seen a 10yr yield low of almost exactly 4.17%.  Tomorrow brings an important slate of econ data with ADP employment, ISM Services, and an afternoon Powell speech. 

Econ Data / Events

Job Openings

7.744m vs 7.480m f’cast, 7.372 prev

Job Quits

3.326m vs 3.071m prev

Market Movement Recap

09:36 AM Slightly weaker overnight, then stronger on geopolitical headlines.  MBS up 2 ticks (.06) and 10yr down 1.7bps at 4.177

10:55 AM At the lows of the day with MBS now unchanged and 10yr up 1.2bps at 4.206

02:48 PM Modest recover into 1pm hour, but back near same lows now.  MBS down 3 ticks (.09) and 10yr up 1.9bps at 4.213

The bond market is the primary driver of mortgage rate movement and normally, “weakness” equates to higher rates.  Bonds are slightly weaker today compared to yesterday afternoon, but mortgage rates nonetheless managed to move lower.  What gives? Timing is partly to blame.  Bonds may be weaker than yesterday afternoon, but they’re still stronger than yesterday morning, when most lenders publish their rates for the day.  After that initial rate offering, it takes a fair amount of bond market volatility before the average mortgage lender will make changes to mortgage rates.  Several lenders offered improvements yesterday afternoon in response to bond market improvements.  In those cases, their rates were fairly similar today.  Ironically, just as yesterday’s volatility resulted in improvements for rates, today’s volatility is doing the opposite with several lenders “repricing” to slightly higher levels. The net effect is an average rate that is just a hair below yesterday’s, and also the lowest in just over a month. 

Tis the season to have some fun, right? How about we start with this interesting musical duo? While the CFPB’s proposal addressing the selling of data has garnered some attention, with the Winter Solstice less than three weeks away and it isn’t exactly the season when home buying picks up. Nor are interest rates or insurance costs cooperating. But those two aren’t the only obstacle. Clever found that the true cost of buying a home includes an additional $31,975 in home-buying expenses for buyers on top of their down payment. And that figure doesn’t include the average of $12,944 in commission buyers may pay their agents if the seller doesn’t. On average, home buyers spend the following amounts on repairs and renovations ($13,498), furniture, fixtures, and appliances ($6,446), closing costs ($4,754), concessions to the seller ($3,943), moving costs ($2,670), and private mortgage insurance ($387 annually). (Today’s podcast can be found here and Richey May is sponsoring this week’s. Richey May’s consulting, cybersecurity, business intelligence, and automation services are designed by mortgage experts to help you continue to drive growth and increase profitability. Hear an interview with Union Home Mortgage and WithLove Charity’s Tay Schiebe about #GivingTuesday and the ways you and your organization can make a difference both in and beyond your community.) Lender and Broker Software, Services, and Products Join ICE for the 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 next webinar which will be hosted this Thursday, December 5, from 2 – 3 p.m. ET.