Mortgage rates may not be as low as they were before the weekend’s geopolitical headlines, but they’ve moved just a hair lower on each of the past two days. Specifically, our daily rate index is down to 6.19% after starting the week at 6.21% on Tuesday (up from 6.07% last Friday). While there was a large glut of seemingly important economic data today, it didn’t have a noticeable impact on the bond market. Part of the reason is that the data in question is very stale at this point.  The most recent monthly data covered November and the GDP release was for Q3 (July-Sep). Timeliness aside, the data was also very close to forecasts. There’s even less on the calendar tomorrow, but markets remain susceptible to geopolitical risk and any headlines that speak to the fiscal outlook (tariffs, spending, etc). 

Bonds found a bid along with stocks yesterday afternoon after Trump announced a “framework of a deal” on Greenland.  Markets were much less interested in U.S. access and more concerned with pausing the more immediate market-related implications (new tariffs and changes in foreign demand for Treasuries). This notion was reinforced this morning as there was no reaction at all to new comments saying the U.S. would have “total access” to Greenland with “no time limit.” 
The early round of econ data also failed to inspire, although that’s no surprise given the stale nature of GDP and generally limited impact of weekly jobless claims (in addition to the fact that jobless claims are sticking to the same script seen in the past 2 years).

All that remains is the PCE inflation data at 10am ET, but it should be noted this is for the months of Oct/Nov and that we’ve already received CPI/PPI inflation reports for December.  Data aside, yields have been trending gradually higher in concert with European markets, but Treasuries still retain a majority of yesterday’s gains.

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The $13 billion auction was awarded at 4.846%, about a basis point lower than its yield in trading just before 1 p.m.

An index of contract signings decreased 9.3% to 71.8 last month, according to data released Wednesday by the National Association of Realtors.

The Supreme Court Wednesday appeared skeptical of the Justice Department’s argument that removal of a Federal Reserve governor is unreviewable or that the president’s preference for Fed governors outweighs the harm to the Fed from curbing the central bank’s political independence.

Executives surveyed by American Banker said companies vying to wrestle market share from banks are a major threat to operations in the coming year.

Bonds Recovering a Bit After “Framework of a Deal” on Greenland

Geopolitics have been front and center for financial markets over the past 2 days with both stocks and bonds taking clear cues from newswires pertaining to tariff brinksmanship, trade deal negotiations, foreign wealth fund participation, and ultimately, the late-day announcement of a “framework of a deal” regarding Greenland. Details are in short supply, but the most important development being a pause on the plan to implement new tariffs on February 1st. Markets are cautiously trading this as a win for now with stocks and bonds at the best levels of the week, but definitely not back in line with last week’s levels. 

Econ Data / Events

MBA Purchase Index (Jan)/16

194.1 vs 184.6 prev

MBA Refi Index (Jan)/16

1580.8 vs 1313.1 prev

Pending Home Sales

71.8 vs 79.2 prev

Market Movement Recap

09:54 AM choppy, sideways overnight session and little-changed so far. MBS up 2 ticks (.06) and 10yr down 1bp at 4.286

01:25 PM reasonably well received 20yr bond auction.  10yr down 3 bps at 4.266 and MBS up an eighth.

02:57 PM Best levels of the day after Greenland-related tariff pause and word of a “deal framework.”  MBS up 6 ticks (.19) and 10yr down 4.6bps at 4.25

Representatives of both insurers and policyholders point out multiple flaws in the new laws and additional proposed bills.

The President is promising big announcements on housing affordability issues in Switzerland, but will it include ending the GSE conservatorships?