Mortgage rates rose for the fifth consecutive week, to their highest level since August, although they remain more than a full percentage point lower than one year ago.

The Federal Housing Administration wants to allow part-time underwriters to guarantee loans in its FHA Title II forward and HECM programs.

I recently went to my favorite local Mexican restaurant, and there was a sign in the window, “Sorry, we are closed due to short staff.” Someone had written below it, “Higher taller staff because I want a taco.” Economics and interest rates were certainly discussed in Denver this week at the MBA’s annual convention, as were the ramifications of the election. “Unfortunately, no one in Congress has uttered the word ‘deficit’ in 20 years.” “Regardless of the outcome of the presidential election, no one should forget the direction Congress takes, given its role in the budget process.” “Sure, mortgage rates are expected to gradually go down, but what if they don’t? Are lenders and vendors ready for that?” “The Fed has over 400 PhD economists. And even with that it can’t precisely predict the future.” (Today’s podcast can be found here, and this week’s is sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Hear an interview with DelphX’s Patrick Wood on the credit rating market ahead of the U.S. Election.) Lender and Broker Software, Services, and Products Introducing Curindices, Curinos’ new suite of market indices designed to give you the most relevant insights into mortgage market trends. Updated weekly, Curindices delivers national application, lock, and home value data based on our proprietary, marketing leading, lender-sourced data. Curinos sources statistically significant data to produce these benchmark figures, setting the benchmark for smarter, data-driven decisions in mortgage lending. Follow this link to be added to our weekly distribution list and to learn more about how Curinos helps clients stay ahead of the competition in today’s highly competitive market.

If it weren’t for the surge of volume in Treasuries lining up perfectly with economic report release times, one might wonder if traders even care that much about economic data right now.  That would be quite the anomaly considering NFP week is traditionally the most reliable time to see data impact bonds.  The counterpoint is that today’s data wasn’t resoundingly stronger than expected.  Jobless Claims were back in line with trend levels, as expected, and monthly core PCE came in right in line with expectations (arguably a bit lower, considering the unrounded number was as low as it possibly could have been without being rounded down to 0.2% vs the 0.3% forecast).  Lesser headlines were weaker than expected, but didn’t help bonds.  Instead, most of this morning’s cues have come from overseas, of all places (thanks for nothing, U.K.). 
The following chart has the same 20bps of y-axis space for both UK and US 10yr yields.  This illustrates where the bond market drama is today, and helps us understand why we’re seeing a late-morning recovery.

Bonus charts just to keep tabs on the evolution of jobless claims data:

Mortgage rates rates moved moderately higher today, and while that leaves the average 30yr fixed rate only slightly higher than it was on Tuesday morning (7.09 vs 7.08), it’s also the highest rate in almost exactly 4 months. In a break from recent norms, the bond market didn’t take cues from data or election positioning.  Instead, it was a massive move in European bond markets (UK specifically) that spilled over to the U.S. in the morning hours.  Once European markets were closed for the day, US bond markets improved and many mortgage lenders were able to offer token improvements in mortgage rates. Bonds, which dictate mortgage rates, were ultimately able to log a fairly flat performance versus yesterday.  That’s the second time this week they’ve been able to show some signs of resilience, but neither attempt has been very impressive.   The lack of conviction isn’t surprising given the high stakes events on the horizon.  Tomorrow’s jobs report could easily send rates sharply higher or lower.  Next week’s election results and Fed announcement represent similar risks (or opportunities).  There’s no way to know if these high stakes events will be good or bad for rates–only that the potential reaction is huge. NOTE: 7.09% is quite a bit higher than what you may see in other news stories about mortgage rates today.  That would be due to the overreliance on Freddie Mac’s weekly rate survey which is still getting caught up with the day to day reality. 

Will Jobs Data Finally Get Bond Market’s Attention?

It’s been a weird week so far with a crazy combination of significant intraday volatility and an absence of any major movement in the bigger picture.  Case in point, closing levels in 10yr yields have been 4.27, 4.27, 4.28, and 4.28 (at the 3pm CME) close.  That’s an uncommonly flat week for closing levels, but even less common during a week with an absolute range of more than 13bps.  Stranger still is that the volatility has taken few–if any–cues from economic data.  Case in point, today’s biggest market mover was the big sell off in UK bonds.  Does this mean markets may be less interested in reacting to tomorrow’s jobs report as much as normal?  The answer is this simple: never bet against the jobs report’s potential to make waves.  Sure, the ultimate level of volatility could be limited by next week’s unknowns, but a lopsided result in either direction would still be almost guaranteed to push rates in the corresponding direction.

Econ Data / Events

Jobless Claims

216k vs 230k f’cast, 228k prev

Continued Claims

1862k vs 1890k f’cast

Core PCE Prices M/M

0.3 vs 0.3 f’cast, 0.1 prev

Core PCE Y/Y

2.7 vs 2.6 f’cast, 2.7 prev

Market Movement Recap

09:40 AM sideways to slightly stronger overnight and a bit weaker after data.  MBS down 2 ticks (.06) and 10yr up 0.7bps at 4.307

10:12 AM More weakness now with US bonds potentially taking some cues from a big UK sell-off.  MBS down 3 ticks (.09) and 10yr up 1.5bps at 4.314

12:23 PM Bouncing back a bit now as U.K. bonds recover.  MBS unchanged and 10yr down 1.3bps at 4.286

03:07 PM Slightly better recovery.  MBS up 1 tick (.03) and 10yr down 2bps at 4.279

Eighty percent of respondents say their current mortgage payment is putting a strain on their personal finances, per a Transunion survey.

Drey Roberts and his team move to de novo warehouse lender Primis Bank as former home Independent Bank makes a strategic exit.

The government-sponsored enterprise reported its best quarter of the year in terms of net income as well as single family business acquired as rates fell to 6.08%.

The mortgage lender lost its license two weeks after Connecticut also axed its ability to originate loans, following an investigation that questioned the company’s financial wherewithal.