It’s not uncommon for certain medications to come with warnings about avoiding certain activities like driving or operating heavy machinery due to the risk of drowsiness. But medications aren’t the only causes of such sleepiness.  Just ask the latest New Home Sales report from Census Bureau! There are several ways to establish the soporific nature of this data. First off, the market is always most interested in data when it falls far from the consensus among economic forecasters. At an annual pace of 676k homes versus a median forecast of 680k, this one was about as close as they come. Perhaps more importantly, the sales count hasn’t been more than 70k higher or lower than that for the past 2 years.  70k might sound like a lot, but consider that it only took a few months to see sales jump more than 400k in 2020, or that the peak to trough move during the financial crisis was over 1 million homes per year. In other words, sales may be exhibiting some month to month volatility, but they’ve been almost perfectly sideways, on average, for just over 2 years now. In regional terms, The Midwest and the South did all of the heavy lifting, adding 13k and 27k homes respectively.  The Northeast brought the national tally down by 6k and the West did the most damage at 22k.  The latest news release from the Census Bureau is always available here: https://www.census.gov/construction/nrs/pdf/newressales.pdf

The typical homebuyer’s monthly mortgage payment reached a record high, up 5.3% year-over-year, but consumers are putting more money down, adding to equity.

Perspective homebuyers with work visas, asylum seekers and DACA recipients seeking the government-backed mortgage will be impacted by this sweeping change.

Dugan is replacing Rich Gagliano, who is moving to executive chairman after 18 months in charge of the now stand-alone mortgage technology provider.

The most tangible concern is in the commercial real-estate market. But the rating agency’s crystal ball is cloudy when it comes to single-family home loans.

The Senate Banking Committee considered the nomination of Paul Atkins to lead the Securities and Exchange Commission, whose track record on deregulation in the lead up to the 2008 financial crisis was questioned by Democratic lawmakers. Lawmakers also considered the nomination of Jonathan Gould to lead the Office of the Comptroller of the Currency and Luke Pettit for a key bank regulatory role at Treasury.

Uneventful Drift Ahead of Friday’s Monthly PCE Data

For the 3rd day in a row, the bond market logged a rather uneventful trading session ending with minimal change versus the previous trading day.  All this despite the presence of several economic reports and Treasury auctions. If there was any reaction to this morning’s data, it was slightly bond-friendly, but not enough to say it was anything other than random. The 7yr auction was a non-event, and stocks failed to offer any of the recent sort of spillover that has frequently made its way into the bond market. From here, the week’s last big chance/risk of volatility is Friday morning’s monthly PCE data.

Econ Data / Events

Jobless Claims

224k vs 225k f’cast, 225k prev

Continued Claims

1856k vs 1890k f’cast, 1881k prev

GDP Revision (Q4)

2.4 vs 2.3 prev

Market Movement Recap

09:06 AM Weaker overnight but improving after data.  MBS up 1 tick (.03) and 10yr up half a bp at 4.358.

01:04 PM No major reaction to 7yr auction.  MBS down 1 tick (.03) and 10yr up 1.6bps at 4.368

03:21 PM Sideways still.  MBS down 1 tick (0.03) and 10yr up 2.1bps at 4.374

The company turned to automation to address pain points it found in working with lines of credit that mortgage lenders are increasingly originating.

In a paper, former central bank researchers make the case that the Federal Reserve could better support the Treasury market from disruptions in the cash-futures basis trade by hedging its asset purchases.

The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency took a measured approach to developing the international capital standards, according to a Government Accountability Office report.