The jobs report (for September) will be released on Thursday. It is the first major econ data to re-appear after the shutdown. Notably, that’s because it was ready to publish at the time of the shutdown (so don’t expect a flood of other announcements). By the time it comes out, we’ll have been waiting 1.5 months for a report that otherwise would have come out in early October. On one hand, that’s kind of stale. On the other hand, it’s the jobs report. Despite the time lag, it can absolutely have an impact (consider that NFP revisions or the always-stale job openings numbers frequently have an impact). That said, we wouldn’t expect it to be nearly as potent as a more timely release.
One day prior, the Fed Minutes release is a bit more interesting than normal considering the wave of hawkish messaging last week (it certainly seems like the Fed was actively trying to prep markets for unfriendly minutes).

Today’s trivia: Missouri and Tennessee are tied for bordering the most states: eight. This week I head to Missouri, the jumping off point for thousands of wagon trains heading west in the mid-1800s. Back then, land grants were relatively common but home loans weren’t, LTVs were high, and repayment was usually within five years. Deals were done with a handshake. Fast forward to today, and we have Fannie Mae dropping its minimum credit score requirements and relying more on DU to assess borrowers. The topics brought up or publicized recently by the Trump Administration include mortgage portability, 50-year mortgage amortization, tech companies doing business deals (with the GSEs with possibly an ownership stake in their companies), and assumability. The last thing we, as an industry need, is being accused of wrongdoing, but unfortunately, under the leadership of Bill Pulte and the FHFA, Fannie Mae allegedly shared pricing information with Freddie Mac. Many of us have been in meetings where Agency counsel attended specifically to ensure that price is not discussed! Some are saying that Mr. Pulte, who reports to the boards of Freddie and Fannie, may be a liability to President Trump who is just trying to improve affordability. Stay tuned. (Today’s podcast can be found here and this week’s are sponsored by Figure. Figure is shaking up the lending world with their five-day HELOC, offering borrower approvals in as little as five minutes and funding in five days. And, embedding their technology is easy. Hear an interview with MBA’s Joel Kan on the mortgage industry’s cautiously optimistic outlook, with steady purchase activity, emerging refi opportunities, and expected annual originations above $2 trillion, despite regional housing softness, a gradually weakening labor market, and uncertain short-term impacts from AI.)

Bayview Asset Management and three affiliates reached an agreement in a data breach lawsuit for an incident that impacted 5.8 million customers.

Delinquencies are at their second highest level in three years, led by deterioration in the performance of FHA loans, the Mortgage Bankers Association said.

The fintech had over $2 billion in home equity line of credit volume in the third quarter and reported growing production in its crypto and non-QM offerings.

While Fitch and Kroll have differing views on mortgage rates next year, both are looking for mortgage delinquencies to rise in their rated portfolios.

The acquisition agreement is the latest example of merger activity this year focused on the recapture potential held within servicing pipelines.

Mortgage rates were only modestly higher on Friday, but because of the narrow prevailing range and previous increases this week, that brings us right in line with 2-month highs. Bonds (which dictate rates) began the day with promise. There was heavy buying (good for rates) in the 7am hour. This coincided with stocks challenging their lowest levels in weeks.  But both stocks and bonds bounced back in the 9am hour. Bonds ultimately erased all of the morning’s gains and, thus, the hope for today’s mortgage rates to be lower than yesterday’s. 

Gains Completely Erased; Stocks Looking More Culpable

Viewed in a vacuum, this mornings 7-8am rally remains enigmatic. There was some small case to be made that stock losses played a role, but the bond buying definitely didn’t line up with stocks in a normal way (i.e. it looked like there was some third variable that caused the bond rally to play out in a much more concentrated way). But as the day progressed, we saw stronger evidence of correlation between stock prices and bond yields. Specifically, a sharp rebound in stocks at the 9:30am NYSE open coincided with an equally sharp reversal in bonds. Yields ultimately leveled off 2.5-3bps higher on the day with MBS spending the afternoon in just barely weaker territory.

Econ Data / Events

ADP Weekly Payrolls (Tue, 11/11)

-11k 

Market Movement Recap

08:39 AM Initially weaker overnight, but now stronger after a big rally at 7am-730am. MBS up 5 ticks (.16) and 10yr down 5bps at 4.067

09:58 AM giving up most of the AM gains.  10yr down less than half a bp at 4.112.  MBS still up 3 ticks (.09) but down 5 ticks (.16) from AM highs. 

12:24 PM New lows.  MBS down 1 tick (.03) and 10yr up 2.7bps at 4.142

04:22 PM Heading out near weakest levels. MBS down 2 ticks (.06) and 10yr up 3bps at 4.145

Bonds were sideways to slightly weaker in the overnight session.  4am to 7am was exceptionally flat and narrow. This is notable because stocks had done more than half of their overnight selling by 7am, and stocks are one of the only scapegoats. In other words, a “flight to safety” (sell stocks/buy bonds) seems to be the only popular explanation, and it’s entirely unsatisfying when looking at stocks and bonds on a chart.  Our official take is: there’s a secret club and we’re not in it.  There are some straws we could grasp at, but feel less compelled to do so when the magical mystery move is an instant 5bp rally. 

For straw graspers, we can overlay UK bonds (which had some drama this morning) on the same chart and suggest that UK selling was preventing Treasuries from following the stock losses.  And once UK bonds reversed course, TSYs were free to rally.