FHFA Director Bill Pulte has prioritized targeting fraud, including proposing a tougher Suspended Counterparty Program and debuting a mortgage fraud tip line.

Mortgage bankers have been supporting recent updates to the legislative proposal while urging legislators to fast-track it given the phaseout of VASP.

10yr Auction to The Rescue

Today’s 10yr Treasury auction was the only relevant calendar event in terms of potential market movement and it lived up to its billing. Unlike the set-up to many auctions, there was no meaningful weakness in bonds ahead of the 1pm cut-off. The results themselves were decidedly strong and the immediacy of the market reaction reflected that. Yields dropped 4bps more or less instantly, and MBS ultimately added another eighth of a point of improvement to the eighth that was already in play before the auction. From here, attention turns to Wednesday’s Fed announcement, specifically for Powell’s press conference (because there’s zero chance of a rate cut at this meeting). 

Econ Data / Events

Trade Gap

-140.50b vs -137b f’cast, -123.20b prev

Market Movement Recap

09:25 AM Initially weaker overnight, then steadily stronger into AM hours.  MBS unchanged and 10yr nearly unchanged at 4.344

01:04 PM Moving into positive territory after 10yr auction (which came in about 1.2bps below expectations). 10yr yield now down 2.1bps on the day at 4.326 and MBS up nearly an eighth of a point.

02:25 PM Off the best levels, but still stronger.  MBS up 6 ticks (.19).  10yr down 2.5bps at 4.321

03:59 PM Back in rally mode.  MBS up a quarter point and 10yr down 4.2bps at 4.303

Mortgage rates were unchanged for the average lender this morning, thanks to a modest improvement in the bond market overnight.  Rates were on course to remain mostly flat until the afternoon’s scheduled 10yr Treasury auction.  The market’s reaction to the auction allowed many lenders to revise mortgage rates slightly lower. Mortgage rates are based on securities that are similar to US Treasuries in many ways. As such, when something happens that impacts Treasuries, the mortgage securities market tends to feel it. This doesn’t always prompt an immediate change in mortgage rates because lenders only tend to make mid day changes when the underlying market makes a big enough move. Today’s market movement wasn’t exactly massive, but it was enough for most lenders to make an adjustment. In the bigger picture, a strong reception for a 10yr Treasury auction is reassuring for rates in general. That said, it will continue to be economic data and key fiscal developments that dictate momentum going forward.

This is the month of the MBA’s National Secondary in Manhattan. For some trivia, the nickname “The Big Apple” originated in the 1920s in reference to the prizes (or “big apples”) rewarded at the many racing courses in and around New York City. However, it wasn’t officially adopted as the city’s nickname until 1971 as the result of a successful ad campaign… So ads do matter. Mark Zuckerberg thinks that ads will soon all be generated by AI. Not so with legal issues, right? Not so fast: In the UK, Garfield is offering basic legal work that is AI generated. Will AI generate actions for humans to follow? “Rob, did the CFPB send out a memo outlining its priorities going forward?” Yes, it did, unfortunately through the former Twitter: X. Here’s the memo. Things like supervisory exams will drop by 50 percent because they’re expensive, a shift in attention to depository institutions and away from non-depository companies. And a focus on actual fraud against consumers. (Today’s podcast can be found here and this week’s are sponsored by HomeEQ, the fully digital HELOC from Arc Home, which empowers brokers to quickly provide borrowers with easy access to their home equity. Brokers can benefit from competitive compensation, along with comprehensive training and a complete marketing plan designed to help them re-engage former clients and grow their business. Hear an Interview with Vesta’s Mike Yu on hype versus reality when it comes to AI tech in mortgage, and how companies can vet technology vendors.)

Bonds have been on both sides of unchanged so far today. The overnight session began with slightly higher yields followed by a gradual rally.  By 9am ET, bonds were modestly stronger on the day. Some traders are focusing on German political developments with early indications that expected Chancellor Merz didn’t have the votes to win today’s election. After a second round of voting (a big deal in German politics), Merz is in, and German bunds are coming off their weakest levels. There’s been some correlation with US Treasuries finding a supportive ceiling. Today’s only big ticket calendar event is the 1pm 10yr Treasury auction.
Broader momentum arguably remains sideways with yields looking for support near 4.35%–a level that had generally acted as a ceiling in the narrow March range that preceded tariff-related volatility. 

As the lock-in effect deters many current homeowners from buying, the housing market is seeing younger clients stepping in, often with government-backed loans.

The Consumer Financial Protection Bureau under President Trump plans to make changes to the rule governing consumer financial data rights despite rare bipartisan support for the regulation.

The $1.15 billion agreement earmarked for general corporate purposes can increase to $2.25 billion pending the lender’s acquisition of Mr. Cooper.

The company took a break from securitization during the first quarter but was able to get a deal done shortly after the fiscal period ended.