They day begins with 10yr yields down more than 10bps and trading under 4.30% at times. MBS are up 3/8ths with 5.5 UMBS coupons getting close to par.  All of this transpired without any big-ticket data or scheduled events. In other words, despite a few mini-gluts of bond buying, the move has been relatively linear today.  One of the gluts coincided with the EU open, which is not uncommon in overnight trading.  Same story with the 8:20am CME open and the 9:30am NYSE open.

Some might also say that lower energy prices bode well for inflation. Others might say that the correction seen in crude oil is just another way the market is expressing concern over the pace of global growth.

There isn’t too much to glean from the timing apart from a simple reinforcement of the broad-based buying sentiment. So what’s driving the sentiment? The best guesses among traders and analysts involve a few usual suspects including but not limited to the potential economic impact of new fiscal austerity at home, the global economic impact from tariff/trade policy, the labor force implications (both due to tariff/trade policies, government lay-offs, and immigration policy), and lastly, corporate updates on hiring/firing/earnings.

The confabs are a sign that Republicans are getting serious about negotiating the contours of a tax deal, even as the House and Senate are pursuing separate strategies.

Through 1stResponder+, Rate is offering a complimentary one-year accidental death insurance policy that covers the mortgage balance up to $650,000.

Momentum against Maryland guidance that extends licensing requirements to securitization trusts is growing and some legislators want to scale it back.

The real estate company’s latest move leverages artificial intelligence to optimize and simplify the entire home-buying journey for consumers.

Consumer Financial Protection Bureau employees — most of whom are on administrative leave — were asked in an email to list what they accomplished last week. National Treasury Employees Union Chapter 335 said workers should list all the tasks they were told not to perform.

Bonds Improved Throughout The Day, With and Without Stock Market Losses

Based on the movement at the end of last week as well as this morning’s rally, it would be easy to conclude that bonds were benefiting from weakness in the stock market. While that is still arguably true, as the day progressed, we also saw that bonds were willing to hold their gains even as stocks tried to recover. There were no scheduled events that moved markets and a majority of the volume surrounded the first hour or so of the NYSE session. 

Market Movement Recap

10:10 AM Modestly weaker overnight, but rallying back into positive territory now.  MBS up 1 tick (.03) and 10yr down 1bp at 4.416

02:41 PM Flat and calm near best levels.  MBS up an eighth and 10yr down 1.8bps at 4.407

04:46 PM Heading out at best levels with MBS up 5 ticks (.16) and 10yr down 2.7bps at 4.399

Mortgage rates were already in line with the lowest levels since December 18th by last Thursday. They dropped to the best levels since December 12th a day later. end of last week.  When today’s initial rate offerings came out, the average lender was unchanged from Friday, but as the day progressed, bonds improved and many lenders were able to offer a modest improvement.  The result is that we can once again say that rates are the lowest since December 12th, even if most borrowers would see no difference in loan quotes from Friday. The bond market (which underlies and dictates interest rate movement) was very calm today after early gains. Investors are waiting to see Friday’s PCE inflation data before making any big moves in either direction, but there is also some smaller risk of volatility surrounding other events this week.  Honorable mentions include the Treasury auctions on each of the 2 following afternoons as well as Thursday morning’s slate of economic data.

Today I head to Connecticut for a visit with First World Mortgage and the Northeast Mortgage Summit. Today happens to be rocker George Thorogood’s 75th birthday, and mortgage bankers know that he re-did Amos Milburn’s 1953 classic tale of rent collection, land ladies, and payment avoidance. On a more serious note, I’ve been fortunate to spend some informal time recently with some fine mortgage minds discussing topics like the brutal administrative costs of bond programs, and perhaps a future allowing LOs to make price concessions to be competitive instead of the lender. The path forward for Freddie and Fannie, and the cost to consumers of that path, is a concern, but so is Agency innovation, building their executive ranks, keeping the “playing field” level regarding, for example, gfees. Competing against one another in a healthy way is a good thing, but some of the smarter minds believe that there will be a 75-100 basis point increase in rate when it eventually happens. Meanwhile, lenders continue to improve their product and technology, and in today’s episode of Now Next Later, Jeremy and Sasha talk with Melissa Langdale, Founder and CEO of Praxis Lending Solutions, about her expertise in the mortgage industry, the importance of collaboration, scalable solutions, and effective risk management for long-term success in the ever-changing market. (Today’s podcast can be found here and this week’s is sponsored by Sagent. Sagent brings the modern experience customers now expect from loan originations to loan servicing, where lifetime customer relationships are managed and grown. Hear an interview with Figure’s Michael Tannenbaum on capital infusions that will allow for growth in the home equity lending space.)

After a strong finish last week, there was some natural risk that short-covering and position squaring added to the gains, thus increasing the chance of some weakness this morning. While that may have been the case at first, things are changing since the 9:30am NYSE open with stock losses once again spilling over to bond market buying.  That’s the only market mover in play so far this morning and there are no other major flashpoints on the calendar. While we will get more scheduled data in the coming days, none of it will be “top tier” until Friday morning’s PCE data.