Bonds rallied steadily overnight with more of the gains aligning with a data-driven bond rally in Europe. The overnight move brought 10yr yields roughly 2bps lower from yesterday’s close.  Another 2bps of improvement followed this morning’s ADP employment data. ADP’s job count wasn’t particularly far below forecasts (41k vs 47k), but the previous month wasn’t revised much higher (-29k vs -32k initially). At 10am ET, we’ll get Job Openings and ISM Non-Manufacturing–a combo that is arguably heavier hitting than ADP, if the results are not right in line with forecasts. 

What are the attributes of a successful loan officer? In my years of listening to LOs compare notes, many mention “mindset” since the job sometimes can be a grind. LOs fully explore possible niches, manage their database, strive toward leadership, and are willing to understand lending regulations and comply. Regarding that last one, tomorrow’s The Big Picture (January 8) at 3PM ET features MQMR’s Scott Weintraub to break down the regulatory outlook under a new administration, including potential CFPB changes, enforcement priorities, and areas of lingering uncertainty for lenders. They also discuss the growing role of state regulators, where enforcement risk may surface in 2026, and what lenders should be doing now around QC, compliance, and risk management. For example, anyone doing business out in California is watching AB 801 which sets up CRA requirements in that state. (Today’s podcast can be found here. This week’s are sponsored by Polly. Polly operates the industry’s only vertically integrated capital markets platform, purpose-built to maximize profitability through precision cost reduction, margin expansion, and real-time, loan-level attribution and profitability analysis. Today’s has an interview with Aliya’s S.P Wijegoonaratna on properly structuring risk profiles of borrowers and the future of financial services embedded lending.) Asurity Forum Registration is now open for The 2026 Forum by Asurity®, presented in collaboration with premier sponsor RiskExec®, and taking place April 20–22 at The Roosevelt New Orleans. The 2026 Forum brings together leaders in Fair and Responsible Banking, CRA, compliance, and financial crimes for two days of practical, real-world insight. Hosted at The Roosevelt New Orleans, a Waldorf Astoria Hotel, the conference features dynamic panels of regulators, legal experts, and practitioners, along with hands-on sessions covering CRA modernization, fair lending, AI governance, and emerging supervisory priorities. Attendees can earn CRCM and CERP continuing education credits, with CLE credit anticipated pending state approvals. Designed for banks, credit unions, mortgage lenders, and their advisors, the Forum emphasizes candid peer discussion, actionable problem-solving methods, and meaningful professional connections. Capacity is limited. Reserve your place today!

Wednesday had the potential to cause bigger volatility for rates due to the confluence of several important economic reports. If that data had been lopsided in one direction or the other, rates likely would have moved more. As it happened, the data was mixed. The net effect was an exceedingly modest drop in the average 30yr fixed rate. Despite the tiny move, this brings MND’s 30yr fixed rate index back in line with the 2-month lows seen on several recent occasions. Bottom line: today ended up being uneventful in an inoffensive way.  From here, Friday’s jobs report represents the same sort of potential for a volatile reaction.

Annual home-price appreciation ended last year at 0.7%, the smallest calendar-year increase since 2011, when prices dropped 2.9%, according to ICE.

Although some of the cohort surveyed were flush with savings, others admitted having precarious debt situations and steadfast attitudes toward luxury purchases.

Wells Fargo, JPMorgan Chase, U.S. Bancorp and Citigroup will streamline borrower requests for an additional 90-day forbearance, allowing verbal applications.

The deal still faces a lawsuit from activist investor HoldCo Asset Management, which contends that Comerica didn’t properly shop itself before agreeing to sell to Fifth Third.

A housing official renewed his call for credit bureaus to address lenders’ concerns. Low pull-through magnifies a cost that’s small relative to others.

Ending Near Unchanged Levels After Early Head Fake

Trading volumes confirm that bonds are 100% back in action, but after this morning’s selling pressure proved to be a head fake, that volume hasn’t translated to any meaningful momentum.  This isn’t too hard to accept considering the absence of big-ticket econ data. Things change on Wednesday with the release of ADP, JOLTS, and ISM. This is our first chance to see some actual data-driven volatility in several weeks.

Econ Data / Events

S&P Global Composite PMI (Dec)

52.7 vs 53.0 f’cast, 54.2 prev

S&P Global Services PMI (Dec)

52.5 vs 52.9 f’cast, 54.1 prev

Market Movement Recap

09:43 AM Modestly weaker overnight and sideways so far. MBS down 2 ticks and 10yr up 1.2bps at 4.176

10:37 AM Weakest levels of the day on defense spending comments.  MBS down an eighth and 10yr up 2.4bps at 4.187

01:27 PM Bouncing back now. MBS unchanged and 10yr up 1.6bps at 4.179

03:25 PM Holding sideways near unchanged levels in MBS, currently down 1 tick (.03). 10yr yields up 1.1bps at 4.174

As it turns out, not everyone has a loan on their house. In fact, 40 percent of U.S. homes don’t have a mortgage, per the Census Bureau. Should I repeat that? 40%. (Here’s a nice map with state-level information.) What are you, or your company, doing about it? Are you even seeing those potential clients in your database? Regarding new homes… Let’s see, if we’re building 1.5 million housing units a year, and we’re short 6 million housing units, that’s… let’s see… carry the 1… 4 years. Oh, and during that time, housing stock is destroyed by floods, winds, fires, earthquakes… Any other questions? Meanwhile, long gone are the days of the phone “ringing off the hook”: the pandemic was nearly six years ago, and with it, 30-year rates in the 3s. Industry pundits will tell you that there are still too many lenders and too many LOs given where volume (in units) will be this year. And if you get the deal, it will be with low margins. (Today’s podcast can be found here. This week’s are sponsored by Polly. Polly operates the industry’s only vertically integrated capital markets platform, purpose-built to maximize profitability through precision cost reduction, margin expansion, and real-time, loan-level attribution and profitability analysis. Today’s has a dark interview with Johns Hopkins’ Dan Ye on how 90 percent of human capital will be replaced in the next 10 years through AI, and how you can potentially ward off the impending doom.) Products, Programs, and Software for Lenders