The non-QM segment industry-wide had a 25% increase in issuance dollar volume during 2024 as market conditions for private-label securitization were better.

Scott Bessent, Donald Trump’s pick to serve as Treasury Secretary, handled a policy-heavy confirmation hearing with poise, highlighting his preference for relaxed bank regulation, support of the 2017 Trump tax cuts and a hawkish approach to spending.

The agreement with the Securities and Exchange Commission resolves allegations of employee supervision shortcomings in the bank’s capital markets division.

While it was never going to be on the same level as yesterday’s CPI in terms of market movement potential, Retail Sales was likely to be today’s most relevant data. The early price action confirmed that.  Jobless Claims and Philly Fed were stronger than expected. Retail Sales was the only report that was weaker, and that’s the way bonds chose to trade it, moving to erase some of the overnight losses.  Next up were comments from Fed’s Waller on the prospect for 2025 rate cuts and further inflation progress.  This kicked the rally into higher gear, bringing bonds well into positive territory on the day. Treasuries are also feeling enthusiastic about Bessent’s confirmation hearing (and his forceful thoughts on fiscal austerity). Either that, or we’re seeing some follow-through trading and

Do you know the interest rate on your loan? How about the age of your roof? Here in Austin, a big concern is too much growth: Austin has gained 1 million people in the last 15 years. Sprawl, traffic, and new construction have become the name of the game. As well as mounting property tax and insurance costs. Insurance agents and companies seem to be controlling homeowners, remodeling, landscaping, and…roofing. Property and climate risk platform ZestyAI conducted a 27,000-property advanced AI and aerial imagery survey on roof age, which found a surprisingly high proportion of properties have misreported the age of the roof as a result of out-of-date, or self-reported data. 17% of roofs are older than reported by an average of 8 years, and 63% of homeowners do not know the age of the roof, which creates significant risk for insurers and homeowners. “Many insurers still rely on self-reported roof ages, leading to inaccuracies that delay quotes, compromise customer experience, and inflate losses.” (Today’s podcast can be found here and this week’s is sponsored by Calque. White-labeled buy-before-you-sell solutions powered by Calque help you increase purchase volume and increase realtor business by helping them differentiate with a better process. With coverage in the 48 contiguous states, what are you waiting for? Hear an interview with Polly’s Adam Carmel on disruption in the mortgage industry and how companies should evaluate PPE providers.) Lender and Broker Services, Software, and Products

After having a great day yesterday, mortgage rates were able to add another “good” day today.  The net effect brings the average lender’s top tier 30yr fixed rate back down to levels last seen on January 2nd, exactly 2 weeks ago.   Yesterday’s key motivation was the palatable inflation data in the Consumer Price Index (CPI).  Today’s economic data wasn’t nearly as pertinent to the outcome although a slightly softer reading on Retail Sales didn’t hurt this morning.  Rather, it was comments from a member of the Federal Reserve (Waller) and the Treasury Secretary nominee (Bessent). Waller said he sees inflation continuing to fall into line along with the possibility of more Fed rate cuts in the first half of the year. Rates didn’t have a huge reaction to that, but it was a friendly one nonetheless.  Bessent fielded questions during his confirmation hearing and bond markets were pleased to hear his level of austerity with respect to government spending–something that contributes to higher rates indirectly, but significantly. 

2 Straight Days of Gains?!

Not only have bonds managed to pull off a feat rarely seen in recent memory (back to back days of solid gains), but the total drop in yields is the biggest since August 2024.  Today’s improvement wasn’t nearly as big as yesterday’s CPI-driven rally, but it would have been very strange if it had been.  The data and events on tap didn’t have the street cred to drive such craziness.  Modestly weaker retail sales helped yields level off after overnight weakness, but comments from Fed’s Waller and Treasury Secretary nominee Bessent accounted for most of the day’s downward movement in yields. 

Econ Data / Events

Retail Sales

0.4 vs 0.6 f’cast, 0.7 prev

Retail Sales excluding autos

0.4 vs 0.4 f’cast, 0.2 prev

Jobless Claims

217k vs 210k f’cast, 201k prev

Continued Claims

1.859m vs 1.870m f’cast, 1.867m prev

Philly Fed Index

44.3  vs -5 f’cast, -16.4 prev

Market Movement Recap

10:01 AM Slightly weaker overnight with a bit of a recovery after the data.  MBS down only 1 tick (.03) and 10yr up 1.8bps at 4.671

11:53 AM Additional gains after Waller comments and Bessent confirmation comments.  10yr down 4.2bps at 4.611.  MBS up a quarter point.

02:57 PM MBS up 6 ticks (.19) and 10yr down 4.4bps at 4.608

Without admitting wrongdoing, Equifax agreed to pay $725,000 because of a three-week error which lowered credit scores for 77,000 New Yorkers.

Gov. Gavin Newsom modeled his latest order on a similar ban imposed in Hawaii following the 2023 Maui wildfire that aimed to protect community wealth.

Wells Fargo CEO Charlie Scharf validates some of the optimism, telling analysts he feels “really great about our progress.” But he said executives “don’t want to get ahead of ourselves.”