Hedge fund manager Scott Bessent had been the betting favorite to take the reins at Treasury. Scott Turner, a former congressman and NFL player, will lead the housing agency.

Turner served as executive director of the White House Opportunity and Revitalization Council previously.

In its latest financial stability report, the Federal Reserve warned high equity valuations and low levels of liquidity could leave the financial system vulnerable to shocks.

Freddie Mac is offering a municipal bond option for investors in its ML multifamily securitization offerings starting with its December issuance.

The development is the latest in an ongoing series of initiatives the Department of Housing and Urban Development has introduced to encourage growth of the factory-built construction segment.

Investors bought 15.9% of U.S. homes sold in Q3, according to Redfin, a level similar to 2018 and 2019, when the share was around 14%.

The rezoning plan, known as City of Yes for Housing Opportunity, passed a key City Council subcommittee hurdle Thursday after the vote was delayed more than six hours while council members tweaked controversial aspects of the deal.

The bond market has been forced to take the victories that are within reach.  As November winds down, the best victory we could have hoped for was the absence of any additional defeat.  This has been a perfectly successful week in that regard.  Yields fell on Monday and haven’t closed any higher since then.  Today’s economic data doesn’t look too eager to change that sideways streak.  At this point, the previously prevailing uptrend in yields has seen enough of a breakout to view the market in a more sideways light.  This doesn’t preclude a resurgence of selling, but it does likely mean that such a resurgence would need to have justification in the data.

Starting in early October, mortgage rates experienced significant volatility, meaning the average day over day change was much bigger than normal.  While the term “volatility” technically allows for larger-than-normal moves in either direction, there was a clear winner in this case with rates moving almost a full percent higher. Rates take direct cues from the bond market which, in turn, takes cues from several sources.  These include economic data, inflation, geopolitical events, fiscal policy, and monetary policy.  This particular episode was frustrating for fans of low rates because things seemed to be getting worse with and without the typical motivations.  In a nutshell, there was no winning, and all we could do was wait for the smoke to clear. Some semblance of reprieve began to take shape last week, but the underlying bond market remained jumpy.  Volatility finally died down this week.  The average 30yr fixed rate held inside a narrow 0.05% range and ended at the exact same levels seen last Friday.  Just as notable: these are also the same levels that served as the mid-point during the more volatile time frame surrounding the election.  In other words, rates arguably hit some sort of ceiling as early as October 28th and have simply been honing in on the middle ground. This is the best victory that we could have hoped for in the near term.  Rates are afraid of stronger economic data, more persistent inflation, and an overabundance of government debt (something that puts constant upward pressure on rates behind the scenes). In order to see a big drop to lower levels, we’d need to see the most closely watched economic reports come in much weaker and for inflation to drop to below-target levels in month-over-month terms (likely for a few months in a row).

Getting Back to Normal, For a Few Days Anyway

After a decidedly abnormal 6 weeks beginning in early October, bonds began to calm down last week.  This offered some hope that the brisk volatility and selling pressure was subsiding.  With 10yr yields closing inside a 3bp range for 5 days in a row, the restoration of normality is basically confirmed.  Today’s data didn’t have a big impact, but we wouldn’t expect it to (based on the mixed signals).  Bonds continue waiting on early December data for the next big push in one direction or the other.  The upcoming week is always a bit of a wild card due to the holiday and month-end, but the fact remains that there are no truly top tier market movers.

Econ Data / Events

S&P Services PMI

57.0 vs 55.2 f’cast, 55.0 prev

Consumer Sentiment

71.8 vs 73.7 f’cast, 70.5 prev

1yr inflation expectations 

unchanged 

Market Movement Recap

11:29 AM stronger overnight and steadily weaker during domestic hours.  MBS unchanged and 10yr down 1.1bps at 4.409

01:39 PM Little changed from last update.  MBS up 2 ticks (.06) and 10yr down 0.9bps at 4.412

03:58 PM Super sideways, all day, but a bit stronger for MBS, now up an eighth of a point.  10yr down half a bp at 4.417.