Delinquent borrowers in areas hit by Hurricanes Helene and Milton will get a few additional months to find solutions before servicers can resume legal actions.

The Financial Stability Oversight Council’s annual report underscores mounting challenges in commercial real estate, escalating cyber threats, and regulatory gaps in third-party services and stablecoins, urging stronger oversight and legislative action.

Plaintiffs have so far failed to prove the government-sponsored enterprise authorized the $25 expedited payoff quote in question, the magistrate ruled.

“Today’s three-year-olds can switch on laptops and open their favorite apps. When I was three, I ate mud.” Times change. Remember when homeowner’s insurance was an after-thought? In some counties and states, being approved for insurance has become as big a concern as being approved for a loan. “Nonadmitted” insurance is becoming the new norm in many places that face untenable economics when it comes to insuring houses, like coastal Florida or wildfire-prone California. Essentially, insurance tends to be a heavily regulated field, with governments ensuring that insurers have enough money to compensate those they insure, that they’re maintaining high-quality business practices, and that price hikes are limited year to year. When those insurers won’t touch an owner, perhaps they can go to a state-backed insurer, but when even those go out of reach, nonadmitted insurance is there. They have none of the protections or backing of the government and existed at first to insure the comically uninsurable, like nuclear waste projects or fireworks factories. Nonadmitted premiums rose 27.5 percent from 2022 to 2023, compared to 13.8 percent among the admitted market. The number of nonadmitted policies in Florida rose 73 percent to hit 92,000 over the past 14 years. (Today’s podcast can be found here and Richey May is sponsoring this week’s. Richey May’s consulting, cybersecurity, business intelligence, and automation services are designed by mortgage experts to help you continue to drive growth and increase profitability. Hear an Interview with Richey May’s Michael Nouguier on cybersecurity to thwart holiday attacks and best practices as we enter 2025.)

As of last week, rates were showing some signs of resilience, but they had to wait for the true test from this week’s jobs report. Spoiler alert: they passed the test. It wasn’t that the headline job count was particularly low, but it wasn’t strong enough to argue against the fact that the labor market has cooled off compared to the first half of the year, or that 2024 is much cooler than 2023. The simplest way to visualize the cooling is via this chart of the unemployment rate.  It would be fair to point out that 4.2+ is still a historically low unemployment rate, but just as fair to point out that the unemployment rate tends to move with a sort of glacial momentum that rarely changes course abruptly. This cooling is one of the reasons the Fed decided to begin cutting rates in September. As we discussed in the weeks leading up to that, the market is able to anticipate those decisions, thus pushing rates lower before the Fed actually pulls the trigger.  The same thing is arguably happening this week, especially after today’s jobs report. 10yr Treasury yields serve as a benchmark for mortgage rates, indirectly.  They can help us understand how rate sentiment reacts to data.  Here’s how they reacted today: In addition to the jobs report, Wednesday’s ISM Services index was also rate-friendly (i.e. it came out weaker than expected). Mortgage rates don’t always track perfectly with Treasury yields, but they’ve also been moving lower–especially after the jobs report.  The average lender is at the best levels in a little over a month and a half.

Solid Conclusion to a Solid Week. Has The Tide Turned?

After Thanksgiving week introduced a potential breakout from the recent uptrend in yields, this week kept hope alive.  It also kept us in suspense until today due to the jobs report.  Despite a decent facade (227k vs 200k f’cast), the closer one examined today’s jobs data, the weaker it began to look.  Markets agreed without much hesitation.  It wasn’t as if the data was downbeat enough for a massive rally, but we’d argue that today’s modest rally is still a great victory on a week where yields were already pushing the lowest levels since October 21st. Next week will be important in determining the endurance of this rally with Treasury auctions and inflation data.  The following week will set the tone for the end of the year with the Fed’s dot plot and rate announcement. 

Econ Data / Events

Nonfarm Payrolls

227k vs 200k f’cast, 36k prev

Unemployment Rates 

4.2 vs 4.2 f’cast, 4.1 prev

Participation Rate 

62.5 vs 62.7 f’cast, 62.6 prev

Consumer Sentiment

74 vs 73 f’cast

1yr inflation expectations

2.9 vs 2.6 prev

Market Movement Recap

08:54 AM Fairly flat overnight and modestly stronger after jobs report.  MBS up just over an eighth and 10yr down 1.8bps at 4.153

10:03 AM MBS now up a quarter point and 10yr down 3bps at 4.14

11:10 AM off the highs.  MBS now up only an eighth on the day and 10yr up .4bps at 4.175

04:40 PM Heading out near the day’s best levels.  MBS up a quarter point and 10yr down 2.3bps at 4.148

We all know that today’s jobs report is the most important economic data on an given month. We also know that a higher payroll count tends to be bad for bonds/rates.  So why are bonds rallying despite payrolls coming in at 227k versus a 200k forecast?  First off, in the realm of nonfarm payrolls (NFP), this is a small enough beat to be considered “as expected.” 
Perhaps more importantly, traders assumed that last month’s incredibly small 12k NFP would be revised much higher.  Instead, it was only revised up to 36k. Finally, the combination of the labor force participation rate and unemployment rate suggests the actual level of unemployment was 0.2% higher than last time. 
Even without the additional context from the labor force participation rate, the unemployment rate trend seems clear. 
The counterpoint is that 4.2+ is still historically low, but this isn’t a data series that tends to reverse course so quickly once a new trend gets underway.
 

These mitigating factors are more than enough for traders to look past the modest beat in the headline NFP number.

The counterpoint to this morning’s rally is that it’s just not that big as far as NFP-driven rallies go–not even as big as Wednesday’s ISM/Powell combo.

The reaction has been more compelling with respect to Fed rate cut expectations, helping quite a bit to increase the odds of a December cut.  Notice the lack of a reaction in Fed Funds Futures to Wednesday’s data in the chart below.  This is just an interesting observation about what matters to the Fed rate outlook and what doesn’t.

The Consumer Financial Protection Bureau is giving the funds to more than 4.3 million consumers harmed by a defunct credit-repair conglomerate, the largest-ever distribution from the bureau’s victim-relief fund.

The Toronto-based bank suspended its medium-term growth targets and announced a full-scale review of its strategies following historic anti-money-laundering failures.

These regulatory announcements in the banking industry are currently open to public comment.