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10th August, 26
Land Loan, Agentic AI Tools; Deep Dive Into Earnings; Pennymac's Spector on Servicing Value
Here in the hallways at the Western Secondary in L.A., there isn’t a lot of talk about GSE reform, although this short clip from Sam Valverde, ex-acting president of Ginnie Mae, revisits the subject: The GSE reform trigger nobody's watching closely enough. More of the talk is about 2nd quarter earnings, and I received this note: “Rob, I am a broker in Missouri. Last week there was a lot of news about UWM. All I try to do is help my clients. Why should I care about UWM’s earnings, or write downs on the value of their servicing, or losses on hedges?” Thank you for the note: see below for
Land Loan, Agentic AI Tools; Deep Dive Into Earnings; Pennymac's Spector on Servicing Value
Here in the hallways at the Western Secondary in L.A., there isn’t a lot of talk about GSE reform, although this short clip from Sam Valverde, ex-acting president of Ginnie Mae, revisits the subject: The GSE reform trigger nobody's watching closely enough. More of the talk is about 2nd quarter earnings, and I received this note: “Rob, I am a broker in Missouri. Last week there was a lot of news about UWM. All I try to do is help my clients. Why should I care about UWM’s earnings, or write downs on the value of their servicing, or losses on hedges?” Thank you for the note: see below for
10th August, 26
Another Week, Another Oil Price Pivot
Recent experience suggests the safest assumption about oil prices and bond yields is that they will pop and drop with reasonable regularity. In other words, lower prices/yields for a few days following friendly war-related headlines tend to give way to unfriendly headlines and a market reversal. Wash, rinse, repeat. The new week is starting off with unfriendly news and higher oil/yields. There's not much sense in attempting to dig any deeper on market analysis so far today
Another Week, Another Oil Price Pivot
Recent experience suggests the safest assumption about oil prices and bond yields is that they will pop and drop with reasonable regularity. In other words, lower prices/yields for a few days following friendly war-related headlines tend to give way to unfriendly headlines and a market reversal. Wash, rinse, repeat. The new week is starting off with unfriendly news and higher oil/yields. There's not much sense in attempting to dig any deeper on market analysis so far today
7th August, 26
Not Quite The Rally You'd Expect, But a Rally Nonetheless
Not Quite The Rally You'd Expect, But a Rally Nonetheless Today's vitals might be a bit confusing at first glance. Payrolls came in at -23k versus forecasts of 80k. At most moments in history, that would be worth a substantial rally. Today it was only worth 3bps in the 10yr and a quarter point in MBS. To be fair, it was worth even less without a late day drop in oil prices for unrelated reasons. But at this moment in history, low payroll counts are far more common and they're doing far less to influence the unemployment rate (case in point, today's FELL to 4.1% from 4.2%). This went a long way
Not Quite The Rally You'd Expect, But a Rally Nonetheless
Not Quite The Rally You'd Expect, But a Rally Nonetheless Today's vitals might be a bit confusing at first glance. Payrolls came in at -23k versus forecasts of 80k. At most moments in history, that would be worth a substantial rally. Today it was only worth 3bps in the 10yr and a quarter point in MBS. To be fair, it was worth even less without a late day drop in oil prices for unrelated reasons. But at this moment in history, low payroll counts are far more common and they're doing far less to influence the unemployment rate (case in point, today's FELL to 4.1% from 4.2%). This went a long way
7th August, 26
Mortgage Rates End Week at Lows
Mortgage rates dropped moderately today after the latest jobs report showed much lower jobs created than expected. The monthly jobs report is one of the most--if not THE most--important pieces of economic data to the rate market on any given month. If the numbers are close to forecasts, there isn't always a big reaction. Today's numbers were quite far from forecasts for some parts of the report, but slightly offset by others. The net effect was a decent improvement in the underlying bond market. Because mortgage rates are based on bonds, rates dropped accordingly. The average top-tier 30yr
Mortgage Rates End Week at Lows
Mortgage rates dropped moderately today after the latest jobs report showed much lower jobs created than expected. The monthly jobs report is one of the most--if not THE most--important pieces of economic data to the rate market on any given month. If the numbers are close to forecasts, there isn't always a big reaction. Today's numbers were quite far from forecasts for some parts of the report, but slightly offset by others. The net effect was a decent improvement in the underlying bond market. Because mortgage rates are based on bonds, rates dropped accordingly. The average top-tier 30yr
7th August, 26
Another Modest Drop in Mortgage Apps, But Next Week Should Bounce
Mortgage application activity declined for a second consecutive week as higher borrowing costs continued to weigh on both purchase and refinance demand. The Mortgage Bankers Association (MBA) reported a 2.9% decrease in total application volume on a seasonally adjusted basis for the week ending July 31. Purchase applications decreased 4% from the previous week on a seasonally adjusted basis and were 3% lower than the same week one year ago. Elevated mortgage rates continue to challenge affordability, dampening buyer demand despite improved housing inventory in some markets. Refinance activity
Another Modest Drop in Mortgage Apps, But Next Week Should Bounce
Mortgage application activity declined for a second consecutive week as higher borrowing costs continued to weigh on both purchase and refinance demand. The Mortgage Bankers Association (MBA) reported a 2.9% decrease in total application volume on a seasonally adjusted basis for the week ending July 31. Purchase applications decreased 4% from the previous week on a seasonally adjusted basis and were 3% lower than the same week one year ago. Elevated mortgage rates continue to challenge affordability, dampening buyer demand despite improved housing inventory in some markets. Refinance activity
7th August, 26
Cap Mkts Education, Mortgage Ops Support, QC, Flood Cert Tools; Weak Jobs Data
As many of us prepare to head to So Cal for the California MBA’s Western Secondary (800 or so registered), artificial intelligence continues to be the buzz. I recently received this question: “Rob, does it seem to you that we’re now at the same inflection point with AI as when everyone was afraid that DU & LP were going to replace all the underwriters?” Could be, and of course we still have underwriters. Meanwhile, borrowers still need help, and rates don’t show signs of going down. I received a question about “off the beaten path” routes for assistance. The Mortgage Credit
Cap Mkts Education, Mortgage Ops Support, QC, Flood Cert Tools; Weak Jobs Data
As many of us prepare to head to So Cal for the California MBA’s Western Secondary (800 or so registered), artificial intelligence continues to be the buzz. I recently received this question: “Rob, does it seem to you that we’re now at the same inflection point with AI as when everyone was afraid that DU & LP were going to replace all the underwriters?” Could be, and of course we still have underwriters. Meanwhile, borrowers still need help, and rates don’t show signs of going down. I received a question about “off the beaten path” routes for assistance. The Mortgage Credit
7th August, 26
Much Stronger Start After Negative NFP Print, But...
Nonfarm payrolls (NFP) FELL 23k versus an 80k forecast. Last month was revised down as well. From a traditional market-watching perspective, this is pure rally fuel. Indeed, bonds are rallying sharply so far. Let's hope it sticks. Why wouldn't it? As labor force dynamics have shifted, it doesn't take much job growth (or perhaps any?) to keep the unemployment rate steady. In fact, unemployment dropped in today's report, though it should be noted it's offset by a lower labor force participation rate (meaning unemployment basically held steady). We've seen some shifts in trading patterns
Much Stronger Start After Negative NFP Print, But...
Nonfarm payrolls (NFP) FELL 23k versus an 80k forecast. Last month was revised down as well. From a traditional market-watching perspective, this is pure rally fuel. Indeed, bonds are rallying sharply so far. Let's hope it sticks. Why wouldn't it? As labor force dynamics have shifted, it doesn't take much job growth (or perhaps any?) to keep the unemployment rate steady. In fact, unemployment dropped in today's report, though it should be noted it's offset by a lower labor force participation rate (meaning unemployment basically held steady). We've seen some shifts in trading patterns
6th August, 26
Almost Like Clockwork
Almost Like Clockwork Almost like clockwork, after several days spent mostly rallying on a headline-driven drop in oil prices, bonds reversed course as the tone of the headlines changed and oil prices bounced. That said, oil didn't bounce too much today. The rest of the drama for bonds came courtesy of a big corporate bond announcement before the open. Yields remain safely under supportive ceilings for now, but weekend-adjacent days have been prime candidates for war headline volatility. And as always, the jobs report can never be ruled out as a source of inspiration for better or worse.
Almost Like Clockwork
Almost Like Clockwork Almost like clockwork, after several days spent mostly rallying on a headline-driven drop in oil prices, bonds reversed course as the tone of the headlines changed and oil prices bounced. That said, oil didn't bounce too much today. The rest of the drama for bonds came courtesy of a big corporate bond announcement before the open. Yields remain safely under supportive ceilings for now, but weekend-adjacent days have been prime candidates for war headline volatility. And as always, the jobs report can never be ruled out as a source of inspiration for better or worse.
6th August, 26
Mortgage Rates Slightly Higher Ahead of Jobs Report
Mortgage rates rose modestly on Thursday, with multiple lenders making mid-day adjustments in response to bond market volatility. Bonds remain highly attuned to war-related developments and the impact on oil prices which, in turn, have a bearing on inflation implications. Higher inflation begets higher interest rates, all else equal. In addition to the oil/inflation narrative, bonds also came under some pressure as Alphabet announced a large corporate bond offering. Like anything in the market, bond prices change in response to supply and demand. If a big corporate bond competes for
Mortgage Rates Slightly Higher Ahead of Jobs Report
Mortgage rates rose modestly on Thursday, with multiple lenders making mid-day adjustments in response to bond market volatility. Bonds remain highly attuned to war-related developments and the impact on oil prices which, in turn, have a bearing on inflation implications. Higher inflation begets higher interest rates, all else equal. In addition to the oil/inflation narrative, bonds also came under some pressure as Alphabet announced a large corporate bond offering. Like anything in the market, bond prices change in response to supply and demand. If a big corporate bond competes for
6th August, 26
Modest Overnight Weakness on Oil and Corporate Issuance.
It's as good of a day as any to revisit our primer on corporate debt issuance given that it's having an impact on bonds today. Alphabet announced a $25bln bond offering around 7:45am ET, and yields instantly moved 2bps higher. Before that, there was nearly 2bps of weakness as bonds followed oil prices modestly higher. Since the start of the domestic session, things have been calm. Econ data was a non-event. Both MBS and Treasuries are holding near yesterday's weakest levels (not a huge deal considering the narrow range). Lastly, this could simply be viewed as a quick, token
Modest Overnight Weakness on Oil and Corporate Issuance.
It's as good of a day as any to revisit our primer on corporate debt issuance given that it's having an impact on bonds today. Alphabet announced a $25bln bond offering around 7:45am ET, and yields instantly moved 2bps higher. Before that, there was nearly 2bps of weakness as bonds followed oil prices modestly higher. Since the start of the domestic session, things have been calm. Econ data was a non-event. Both MBS and Treasuries are holding near yesterday's weakest levels (not a huge deal considering the narrow range). Lastly, this could simply be viewed as a quick, token