Gallego introduced legislation to amend the EB-5 immigrant investor visa program in order to funnel more money into the construction and rehabilitation of homes.

Bond Momentum Continues Ignoring Data

On multiple recent occasions, we’ve seen bonds make a moderate move on days with important economic reports, but not in response to those economic reports. Thursday was the latest example. The 8:30am jobless claims data was undoubtedly a tradeable event based on the big volume spike at the time, but the higher yields were already in place by the time the data came out. Moreover, there wasn’t much of a response afterward. Bonds spent the rest of the day drifting sideways to slightly weaker, but still very much in the prevailing pre-Thanksgiving range (i.e. 10yr yields 4.05-4.17).

Econ Data / Events

Challenger layoffs (Nov)

71.321K vs — f’cast, 153.074K prev

Continued Claims (Nov)/22

1,939K vs 1960K f’cast, 1960K prev

Jobless Claims (Nov)/29

191K vs 220K f’cast, 216K prev

Market Movement Recap

08:53 AM moderately weaker overnight with additional temporary selling after jobless claims data. MBS down 3 ticks (.09) and 10yr up 3bps at 4.093

01:59 PM 10yr yields are up 4bps at 4.104. MBS down 5 ticks (.16). 

03:02 PM MBS are now down 6 ticks (.19) and 10yr up 4.7bps at 4.11

Treasury Secretary Scott Bessent said the Federal Reserve Board should reject the renomination of any regional Federal Reserve Bank presidents who have not lived in their districts for three years, signaling a potential confrontation when reappointments come before the board in February.

A North Carolina homeowner says the large servicer’s $6.75 fee for borrowers to make mortgage payments with a debit card violates a state debt collection law.

Private-sector payrolls decreased by 32,000, according to ADP Research data released Wednesday. Payrolls have now fallen four times in the last six months.

At issue is the CFPB’s weekly publication of Average Prime Offer Rate tables, a key benchmark enabling the smooth operation of the $13 trillion residential mortgage market.

The contract rate on a 30-year mortgage dropped 8 basis points to 6.32% in the week ended Nov. 28, which included the Thanksgiving holiday, according to Mortgage Bankers Association data released Wednesday.

Weaker Data Endorses the In-Progress Rally

Who knows how today would have ended up if the relevant econ data had come in stronger than expected. Perhaps that would have been enough to see an earlier, more threatening sell-off in bonds. As it stands, we’re heading out the door with moderate gains, even if we can’t give clear credit to the data (because the gains happened before the data). Thursday brings another chance to see if different data (Jobless Claims, Challenger Layoffs, Revelio payrolls) will be worth any more of a response. Otherwise bonds are just grinding out a range ahead of next Wednesday’s Fed Day. 

Econ Data / Events

ADP Employment

-32k vs 10k f’cast, 42k prev

ISM Biz Activity (Nov)

54.5 vs — f’cast, 54.3 prev

ISM Services PM I (Nov)

52.6 vs 52.1 f’cast, 52.4 prev

ISM Services Employment (Nov)

48.9 vs — f’cast, 48.2 prev

ISM Services New Orders (Nov)

52.9 vs — f’cast, 56.2 prev

ISM Services Prices (Nov)

65.4 vs — f’cast, 70.0 prev

Market Movement Recap

08:37 AM 10yr down 3bps at 4.06 and MBS up more than an eighth of a point even before the ADP data. Little-changed since then. 

10:02 AM No major reaction to ISM data.  MBS up an eighth and 10yr down 2.2bps at 4.069

10:38 AM Session lows with MBS down 5 ticks (.16) from AM highs (still up on the day, barely).  10yr down less than 1bp now and up more than 3bps from the lows at 4.084

12:43 PM bouncing back a bit.  MBS up 3 ticks (.09) and 10yr down 2.3bps at 4.068

03:59 PM MBS up 5 ticks (.16) and 10yr down 3.1bps at 4.06

10yr yields are almost 4bps lower in early trading and the ADP employment report came in at -32k vs a +10k forecast. The logical conclusion would be that the data is responsible for the rally, but there was actually a remarkably light reaction to the data, both in terms of volume and volatility.  Most of the gains arrived between 6am and 7:30am ET and yields are actually back in line with pre-ADP levels by 8:30am.  The morning’s next big report is ISM Services at 10am ET.

Both Dick Van Dyke and Mel Brooks turn 100, Dick in less than two weeks and Mel next summer. 100 years is a long time, and it’s a big number. Despite faster economic growth than peers, the U.S. faces rising deficits and debt levels above 100 percent of GDP. If this impacts our debt ratings further, look out. Political gridlock and reluctance to enact meaningful tax increases or spending cuts echo challenges seen in the UK and France, where governments struggle to satisfy voters, lenders, and economic needs simultaneously. Recent market jitters, such as the spike in Treasury yields in April, serve as warnings of potential debt-market instability if political inaction persists. For something more constructive to think about for lenders, today Marcia Davies, COO of the Mortgage Bankers Association, joins L1 for one of her last interviews before retirement, and tomorrow’s The Big Picture at 3PM ET features Mike Yu, CEO of Vesta, for a fast, insightful conversation on the future of loan origination systems and what it means to rebuild the LOS from the ground up. Mike shares the Vesta origin story, why legacy systems have reached their limits, and how a true platform approach built on open architecture and modern APIs is reshaping how lenders design their tech stacks. (Today’s podcast can be found here and this week’s are sponsored by Two Dots, whose conversational screening agent replaces manual underwriting with a streamlined, end-to-end process that reduces risk and fraud while securing safer borrowers, increasing profitable loan volume, and lowering underwriting overhead. Today’s has an interview with U.S. Bank’s Shelly Kobb and Ohio Housing’s Tom Walker on how Housing Finance Agencies work, the challenges they face in expanding affordable homeownership, the policy and political developments shaping their future, and the innovations and outreach strategies needed to keep their programs sustainable, effective, and accessible.)