Billions in home equity sit untapped as second-lien loans struggle to gain traction, writes the chairman of Whalen Global Advisors.

In a relatively mild oversight hearing in the House Financial Services Committee Tuesday morning, regulatory heads at the Federal Reserve, Office of the Comptroller of the Currency, National Credit Union Administration and Federal Deposit Insurance Corp. outlined plans for reduced capital requirements and debanking enforcement.

The Troy, Michigan-based lender and servicer faces at least seven lawsuits over a hack in June allegedly perpetrated by a known ransomware gang.

Steady Gains Throughout The Day

Bonds began the day in modestly weaker territory although MBS were fairly quick to get back to ‘unchanged’ while 10yr Treasuries couldn’t duplicate that feat until the afternoon. There were no clear correlations with other markets and no notable risks on the econ calendar. The gains were slow and steady enough to suggest an absence of discrete catalysts. That could change on Wednesday with the confluence of ADP and ISM Services–both capable of influencing the bond market, even before the shutdown data dynamics temporarily magnified private data’s importance.

Econ Data / Events

ISM Manufacturing Employment (Nov)

44.0 vs — f’cast, 46.0 prev

ISM Manufacturing PMI (Nov)

48.2 vs 48.6 f’cast, 48.7 prev

ISM Mfg Prices Paid (Nov)

58.5 vs 59.5 f’cast, 58.0 prev

Market Movement Recap

10:38 AM Weaker start, but bouncing back a bit now.  MBS up 2 ticks (.06) and 10yr yield up 1bp at 4.098

01:13 PM Best levels of the day with MBS up 3 ticks (.09) and 10yr up only half a bp at 4.092

03:43 PM Just a bit stronger. MBS up 5 ticks (.16) and 10yr down 0.1bps at 4.087

The Consumer Financial Protection Bureau and its union filed legal briefs Friday after a district court judge asked if a preliminary injunction aimed at preventing a mass layoff is still in effect.

Federal Reserve bank supervisors are monitoring community and regional banks’ commercial real estate portfolios amid concerns over “lower commercial property values,” the agency said.

Housing affordability will improve by 3% next year, according to First American’s September Real House Price Index.

Planet Home Lending, helped by growing recapture and distributed retail volume, did 64% more originations in the third quarter than one year prior.

Fortress has been one of the most active home equity investment firms in November, investing $1 billion in Cornerstone.

Complete Silence After AM Volatility

Bonds were mostly flat overnight before a sharp sell-off from 8am through 10am ET. After that, momentum went flat again–especially the last 4 hours of trading.  No one is still debating whether or not the AM sell-off was due to Japan’s central bank news or a post-holiday return to reality. Yields are back in the pre-Thanksgiving range and ready to respond to this week’s bigger-ticket econ reports.

Econ Data / Events

ISM Manufacturing Employment (Nov)

44.0 vs — f’cast, 46.0 prev

ISM Manufacturing PMI (Nov)

48.2 vs 48.6 f’cast, 48.7 prev

ISM Mfg Prices Paid (Nov)

58.5 vs 59.5 f’cast, 58.0 prev

Market Movement Recap

09:27 AM Mostly flat overnight but selling steadily since 8am.  MBS down a quarter point and 10yr up 6.9bps at 4.084

11:09 AM No reaction to ISM data.  Holding at weakest levels.  MBS down 9 ticks (.28) and 10yr up 7.6bps at 4.09

02:34 PM Steady at weakest levels. MBS still down 9 ticks (.28) and 10yr up 7.9bps at 4.093