To say the very least, there are more moving pieces to consider at the moment when it comes to the narrative guiding volatility and momentum in the bond market.  Tariff and policy-related headlines have been good for ebbs and flows in risk sentiment, but haven’t necessarily accounted for a majority of the momentum.  That said, an absence of a more onerous tariff roll-out has likely been worth some relief in bonds. On a more material note, today’s Treasury refunding announcement confirmed the expected level of issuance this quarter–not groundbreaking news, but mildly reassuring at least.  And then there’s the fixture in the bond market movement game: economic data.  Today’s slate is limited to ADP employment and ISM Services when it comes to perennial market movers.  ADP was forgettable, but ISM missed forecasts both at the headline level and in the inflation component.  With that, bonds are off to a noticeably stronger start.

These gains are potentially more important than gains at another random level as they help make a case for pivot down below the 4.50 mark.

I know where to go when this Commentary writing gig grows stale. Wanna make 30 clams an hour? Costco’s hiring! (Remember when lenders and originators were very nervous about Costco taking over home lending? Or was it Amazon?) I doubt if CFPB employees will be checking out the listings, and I received this note from Florida. “Rob, I have heard rumblings about ‘doing away’ with the CFPB, created from the Dodd–Frank Wall Street Reform and Consumer Protection Act voted into law by Congress in 2010. Everyone in our business should be against doing away with, or de-funding, the Consumer Finance Protection Bureau entirely, as Ted Cruz’s proposed legislation would do, or Elon Musk’s beliefs. Do we, as lenders, want 50 different interpretations of LO comp plans? 50 different versions of what the consumer should understand when signing mortgage paperwork? 50 different states creating their own Ability to Repay laws? 50 different versions of servicing rules? What will that do to the cost of loans for lenders which are passed onto borrowers? (Today’s podcast can be found here and this week’s is sponsored by Optimal Blue. OB bridges the primary and secondary mortgage markets to deliver the industry’s only end-to-end capital markets platform, helping lenders maximize profitability and operate efficiently so they can help American borrowers achieve the dream of homeownership. Hear an interview with Optimal Blue’s Erin Wester on new products the company announced at Optimal Blue Summit in San Diego.)

The recent absence of volatility in day-to-day mortgage rate movement has been an easy target for light-hearted indignation among market watchers.  But to be fair, if rates had been moving swiftly higher/lower/both, most market watchers would wish for some sideways stability.  In fact, for most prospective borrowers as well as mortgage professionals, the only thing better than sideways stability is a healthy drop to lower levels. Now, after a week of utter flatness, we finally have such a drop. Rates are determined by trading levels in the bond market and bonds can be influenced by many factors.  One of the most reliable is the periodic release of various economic reports.  Today’s key data showed less strength than expected in the services sector.  In general, when an important economic metric is weaker than expected, it pushes rates lower, and vice versa. Today was no exception, but bonds had already improved even before the data came out. Connecting the dots of causality on that additional movement requires a bit more speculation, but some would say it has to do with perceived economic headwinds associated with new fiscal policies.  Conversely, others would say it’s due to the delayed timeline of implementation for those same policies.  Either way, the net effect is always measurable because we can always take inventory of multiple mortgage lenders’ rate offerings.  In doing so today, we find the top tier conventional 30yr fixed rate back below 7% for the first time since December 17th, even if only be a mere 0.01%.

The Federal Reserve terminated two mortgage-related enforcement actions against Wells Fargo & Co. from more than a decade ago, the central bank said Tuesday.

The Federal Reserve Board lifted two enforcement actions against the megabank dating back to 2011. But the Fed’s seven-year-old asset cap remains in effect.

Desmond will be succeeding Pierre Naudé in leading the bank technology provider.

Some mortgage stakeholders say Trump’s tariffs would make interest rates rise and housing costs shoot up.

The newly created entity, Rithm Acquisition, is a possible, albeit unlikely, way to finally take its NewRez mortgage lending business public.

If you like your mortgage rate movement boring and minimal, this week’s for you (and last week, and the week before that).  Going all the way back to January 17th, the average lender hasn’t changed their top tier 30yr fixed rate quote by more than 0.05%, and has been operating in an overall range of 0.07%. To get an idea of how narrow that is, a typical highly volatile day involves rates moving by more than .12%.  In stark contrast, the average rate hasn’t changed by even 0.01% since last Thursday. This stability isn’t for lack of apparent inspiration for volatility. Clearly, there are plenty of political developments in the first month of any new presidential administration. Those developments have indeed translated to small scale, in-range volatility in the markets that determine interest rates, but they’ve largely canceled each other out, or been canceled out by other events.  Despite the calm, we wouldn’t advocate a complacent attitude looking forward. Rates can still be impacted by economic data and the next 6 business days bring the heaviest hitting reports of the month (chiefly Friday’s jobs report and next Wednesday’s Consumer Price Index).

Bonds Rally Back to Prevailing Range

The only moderately inconvenient part of the day was the morning hours as bonds lost ground overnight and started out weaker in domestic trading.  That didn’t last long. Yields began falling just after 9am and continued lower after today’s biggest economic report came out weaker than expected (job openings at 7.6m vs 8.0m f’cast). Oil prices took a temporary hit from newswires regarding Trumping increasing pressure on Iran, but as that price spike leveled off, bonds continued to improve. Some news outlets suggest today’s gains had something to do with the Mexico/Canada tariff pause, but that news was out well before the AM weakness. The simplest view is that bonds opted to maintain the prevailing range which has seen 10yr yields hold within 6bps of 4.53 since January 24th.

Econ Data / Events

Job Openings (lower is better for rates)

7.6m vs 8.0m f’cast

Job Quits (lower is better for rates)

3.197m vs 3.064m f’cast 

Market Movement Recap

10:32 AM Weaker overnight, but back near unchanged after JOLTS data.  MBS up 1 tick (.03) and 10yr down .4bps at 4.555

12:31 PM best levels of the day. MBS up an eighth and 10yr down almost 4bps at 4.521

03:11 PM some more gains with mbs up 6 ticks (.19) and 10yr down 4.4bps at 4.516