In the bigger picture, the past two and a half weeks have been marked by a very narrow range in the bond market. Because bonds dictate mortgage rates, the latter have also been in a narrow range with average top tier 30yr fixed rates of 6.15-6.20%.  Yesterday’s employment-related data helped bonds improve. Many lenders made mid-day improvements to mortgage rates yesterday, but there was enough of a tailwind that the average lender was lower again this morning–now in line with the lower boundary of the recent range. Next Wednesday’s labor market data is a higher stakes event–one that could either bring rates back to the multi-year lows seen in January or push them up to the highest levels since December.

Friday is the quietest day of the week in terms of scheduled econ data and events, with the relatively unimportant Consumer Sentiment being the only notable report. Bonds are roughly unchanged to start the session. Treasury yields are technically a few bps higher from yesterday’s 5pm levels, but right in line with 3pm (what many would argue to be the proper time to mark daily closing levels in Treasuries). Thursday’s trifecta of downbeat labor data piqued the market’s interest in next week’s big jobs report. But between now and then, Treasuries don’t seem overly eager to re-enter the sub-4.20% trading range. 

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Mortgage rates edged higher after the Fed held rates steady, with markets weighing political shifts, Treasury moves and mixed signals on where borrowing costs head next.

The mortgage technology unit at Intercontinental Exchange posted a profit for the third straight quarter, even as lower minimums among renewals capped growth.

Bowing to industry pressure, the Consumer Financial Protection Bureau is warning consumers with notices on its complaint portal not to file disputes about inaccurate information on credit reports, among other changes.

Rising defaults, fraud risks, and collapsing rents are converging in urban multifamily, threatening lenders and taxpayers, according to the Chairman of Whalen Global Advisors.

The lender isn’t accusing United Wholesale Mortgage of wrongdoing, but says a broker secured loans for the same customers from both companies weeks apart.

Mortgage rates are driven by bonds and that bonds care about employment data. There are quite a few different economic reports that focus on various employment metrics. Next Wednesday’s jobs report is the biggest ticket by far, but other reports can move the needle at times–especially when they fall far from forecasts or previous readings. This was the case with three separate reports today.  One of them almost never gets covered in the news, but it showed planned layoffs at large firms were the third highest since 2020. The second was the weekly jobless claims report, which finally ticked up to slightly higher levels after coming in lower than average over the past few weeks. Garnering the biggest reaction was the Job Openings data for December, which showed the lowest levels since September 2020–much lower than forecast for today. The bond market was surprisingly willing to respond.  There was even a noticeable shift in Fed rate cut expectations (not that this should be confused for anything that impacts mortgage rates!).  The average lender moved back to the lowest levels of the week after spending the last 2 days at 2-week highs.  Caveat: the 2 week range is very narrow (6.15-6.20). [thirtyyearmortgagerates]

Surprisingly Big Bond Rally Relative to The Data

Bonds went on a bit of a buying spree on Thursday. It was the biggest rally day since November, at least, and that’s impressive given the motivations. Specifically, there was a trifecta of downbeat labor market reports (Challenger, Jobless Claims, and Job Openings). Individually, none of these are worth a third of the move we saw today, but the whole was greater than the sum of its parts.  There’s also a 4th report being traded today: next week’s big jobs report. In other words, between yesterday’s ISM employment numbers and today’s reports, traders are taking a cautious lead-off ahead of the big jobs report. This raises the stakes for volatility next Wednesday morning. 

Econ Data / Events

Continued Claims (Jan)/24

1,844K vs 1850K f’cast, 1827K prev

Jobless Claims (Jan)/31

231K vs 212K f’cast, 209K prev

Market Movement Recap

08:32 AM Modestly stronger overnight with additional gains after AM data.  MBS up almost an eighth and 10yr down 4bps at 4.24

10:06 AM Additional gains after JOLTS data with 10yr down 5 bps at 4.228 and MBS up 5 ticks (.16).

01:09 PM Best levels of the day. MBS up a quarter point and 10yr down 7.1bps at 4.207