Brian Moynihan spoke of the challenges of developing and maintaining Erica, the bank’s main internal AI model, with precision.

The average top-tier 30yr fixed mortgage rate rose 0.08% last Friday after the jobs report came in much stronger than expected. Today added another 0.02% of upward movement. Today’s level of 6.68% is the 3rd highest of the past 9 months. Unlike Friday, there were no big-ticket economic reports driving volatility in rate markets. The only arguable cause and effect was seen earlier in the morning surrounding war-related headlines. These actually helped rates start the day lower than they otherwise would have. As the week continues, investors will remain tuned in to war-related developments as well as an important inflation report on Wednesday morning (the Consumer Price Index or “CPI”). 

Bonds Faded in the Afternoon Despite Oil Price Recovery

Oil prices and bond yields started the overnight session higher, but both moved to the lows of the day just after 9:30am. From then on, oil went broadly sideways while bonds sold off gradually. If oil had instead moved higher into the afternoon, we might not care about the bond market weakness. But as it stands, we have bond-specific defensiveness in the afternoon replacing the modicum of bond-specific bullishness we noted in the morning commentary. Not the end of the world, but not ideal.

Market Movement Recap

09:13 AM Sideways to slightly stronger. MBS up 1 tick (.03) and 10yr down half a bp at 4.528

10:40 AM 10yr yields are up 2bps at 4.552 and MBS down 5 ticks (.16). 

03:27 PM MBS down an eighth and 10yr up 2.3bps at 4.555.

Remember when talk of a “re-IPO” of Freddie and Fannie dominated residential lending news? That has certainly quieted, Pulte’s attentions are diverted, and you can certainly buy stock in them now: share prices for both are down about 30 percent this year so maybe they’re a bargain. For those new to the biz, the FHFA oversees F&F, and the FHFA’s Director is Bill Pulte who is not without his critics and videos why. Meanwhile, in more constructive videos and interviews, housing affordability dominates the conversation, but Pennymac CEO David Spector argues the real solutions extend far beyond mortgage rates. In a candid interview with Robbie Chrisman, Spector shares his views on housing supply, homeowner lock-in, regulatory reform, and how technology could fundamentally reshape the mortgage experience. Hear from a couple veteran LOs about how the lowest rate isn’t always the best mortgage advice and how the best mortgage solution isn’t always the obvious one. (Today’s podcast can be found here and this week’s ‘casts are sponsored by JazzX, the first true end-to-end AI platform built for mortgage. From application to underwriting, JazzX is a new operating model that helps you scale growth, boost productivity, and transform how your team performs. Hear an interview with Littler’s Colton Long on how employers are increasingly responding to employee departures with legal action over alleged non-solicitation, confidentiality, and trade secret violations.) Lender and Broker Products, Software, and Services

Things got a bit worse before they got better over the weekend. 10yr yields were as high as 4.58% in overnight trading, but are now roughly unchanged in early domestic trading. Oil prices mirrored the same movement overnight, but haven’t recovered as much as bond yields. In fact, bonds arguably led the move lower with a gradual rally starting just after 5am ET. Most of the drop in oil prices followed news that Israel agreed to halt today’s attacks in Lebanon. There is no big ticket econ data on tap. War headlines remain relevant as does the bond market’s ongoing range-finding after Friday’s rout.

The announcement follows a leave of absence in which Ginnie Mae President Joe Gormley helped cover the Federal Housing Admission Commissioner’s responsibilities.

The companies now anticipate generating around $14 billion in annual origination volume, making them one of the biggest lenders in the country.

A credit union service organization is buying the division, which includes mortgage services provider QRL, while the seller repositions its home loan business.

President Donald Trump said his administration is still considering a public offering of shares in mortgage giants Fannie Mae and Freddie Mac.

The Bureau of Labor Statistics Friday reported that the economy added 172,000 jobs in May and revised March and April’s employment upward, making the Federal Reserve less likely to cut interest rates to support the labor market in the near term.