Volatility Picked Up Despite Lackluster News Quality

It’s not exactly a new problem, but the issue of incorrect or misconstrued headlines is growing larger as the Iran war persists. It makes sense considering the current lull in both military and diplomatic developments. People who write and profit from breaking newswires are eager to cash in on clicks and dollars. Around 1pm ET today, several newswires created obvious volatility for bonds/oil/stocks. These involved an apparent resignation of a key Iranian official from the negotiations team and the implication that Tehran’s activated air defenses meant a breach of the ceasefire. Both were refuted. Markets corrected slightly, but a certain amount of damage was done (also, markets may not believe the refutations). The net impact on bonds remained small with 10s only up a few bps and MBS down just over an eighth of a point.

Econ Data / Events

Continued Claims (Apr)/11

1,821K vs 1820K f’cast, 1818K prev

Jobless Claims (Apr)/18

214K vs 212K f’cast, 207K prev

Market Movement Recap

08:34 AM A hair stronger after being flat overnight. MBS up 2 ticks (.06) and 10yr yields are up nearly 1bp at 4.295

11:54 AM MBS up 2 ticks (.06) and 10yr down half a bp at 4.298

01:43 PM Weakest levels. MBS down nearly a quarter point and 10yr up 4.5bps at 4.349

02:31 PM Bouncing back a bit as previous headlines have been mostly retracted. MBS still down an eighth and 10yr up 1bp at 4.313

Bonds were almost perfectly flat in the overnight session with yields holding inside a 1.5bp range. Oil prices rose initially, but recovered before the domestic session began. Part of that recovery occurred after headlines said US/Iran negotiations could make a breakthrough according to an Iranian diplomatic source. Social media quickly dubbed the news as “fake,” but a legitimate version exists on ria.ru’s website. So the news wasn’t fake, it was just really really vague and toothless. Even so, bonds reacted to the tune of about 2bps and have been in a choppy, narrow range since then.

After over 40 years in this industry and capital markets, I’ve learned that the best conversations are… with people. For example, a flyer could have been sent out yesterday instead of having a press conference to cover the VantageScore & FICO 10T news, but they chose to talk about it rather than tweet it. People! Next month, we’re putting some of them on camera regularly. Four new shows are coming to the Chrisman network, covering the biggest topics in mortgage right now with the Capital Markets Wrap moving to Wednesdays. Registration is open for these live, monthly, and free shows: The AI Show (a monthly panel on AI in mortgage… What’s working, what’s coming, and what you need to know, first episode May 6 sponsored by JazzXai), Credit Committee (bureau leaders, credit strategists, and data experts on camera together talking about what’s changing in credit, first episode May 20 and sponsored by Equifax), Recapture Wars (the recapture fight in mortgage servicing… Who’s winning, who’s losing, and what the smartest shops are doing differently, first episode May 27), and The Hill: A Marketing Show (starting Tuesday, May 12, one thesis per episode about mortgage marketing, one guest in the room to prove it or fight it, one hill worth dying on… the first editorial podcast in mortgage, hosted by Bri Lees). (Today’s podcast can be found here and this week’s ‘casts are sponsored by Experian Verify, a comprehensive income and employment verification solution for mortgage lenders. By uniting instant payroll data, permissioned access, and research verification in one seamless experience, Experian Verify helps lenders reduce friction, accelerate decisions, and confidently verify every U.S. worker. Today’s has an interview with Paddington Capital Management’s Paul Musson on how policymakers are repeatedly propping up asset prices at the expense of long-term economic health and fairness.)

Credit risk transfers, a means by which banks can move risk off their balance sheets, earned considerable bipartisan support in a House Financial Services subcommittee hearing Wednesday.

Builder mortgage units saw Q1 profit slides (NVR down 17%) despite an 11% rise in new home loan applications. Overall homebuilder net income dropped, and sales incentives remain high.

The enterprises also still plan to add FICO 10T but the release of the historical data stakeholders in their market can use to assess it has taken longer.

The addition of HELOCs at SoFi comes alongside the launch of a new advisory group, as the company heightens its focus on real estate lending.

Toll Brothers’ purchase of Buffington Homes of Arkansas will extend its national outreach with a strong presence in northwest Arkansas, the company said.

Rates remain focused on oil prices and war-related developments. With yesterday’s ceasefire extension and today’s ambiguity over the time frame of that extension, rates are in a distinct holding pattern until the next phase of escalation/de-escalation comes into better focus. For now, the market is generally betting on de-escalation as seen in stocks being near all-time highs and bond yields (aka “rates”) being well off the highs seen in late March. In this environment, day to day rate movement is fairly incidental. Today’s installment brought modest improvement versus yesterday’s latest levels, but the average lender remains in the same tight range (6.29-6.33 for a best-case scenario 30yr fixed) that’s been intact for over a week now.

Uncertainty Extended Indefinitely

Heading into last night’s ceasefire expiration, there was a sense that the market would at least have something to provide a directional cue to break the recent range-bound monotony. Instead, not only was the ceasefire extended, but the new deadline is explicitly TBD. This makes the expiration of range-bound monotony similarly uncertain. Today’s almost perfectly flat trading session submits itself as evidence. All this having been said, the absence of a deadline doesn’t mean things can’t change precipitously.

Econ Data / Events

ADP Employment Change Weekly

54.75K vs — f’cast, 39K prev

Retail Sales (Mar)

1.7% vs 1.4% f’cast, 0.6% prev

Retail Sales Control Group MoM (Mar)

0.7% vs 0.2% f’cast, 0.5% prev

Pending Home Sales (Mar)

1.5% vs 0.1% f’cast, 1.8% prev

Market Movement Recap

09:27 AM MBS up 3 ticks (.09) and 10yr down 1.9 bps at 4.276

12:23 PM MBS now unchanged and 10yr also unchanged at 4.297

03:19 PM MBS up 2 ticks (.06) and 10yr down 0.3bps at 4.292