The Daily Tearsheet

Vital Statistics:

Stocks are higher this morning on no real news. Bonds and MBS are up.

First quarter GDP was revised downward from -0.2% to -0.5%, which was driven primarily by a downward revision in consumption. The real final sales to domestic purchases (kind of an ex-trade balance measure of GDP) was revised downward from 2.5% to 1.9%. The advance estimate was 3.0%, so this was a substantial downward revision. Jerome Powell had dismissed the weak Q1 GDP print because it initially looked like GDP ex-trade was robust, but this revision takes it from robust to just ok.

When you take into account the internals of the employment report – that unemployment was held steady simply by people falling out of the labor force, it looks like the economy is on a weaker foundation than it initially appears.

Having monetary policy tight by 100 basis points is not the appropriate stance, based on the current numbers. Absent trade noise, policy would be neutral, and there would be talk about potentially easing to support the economy.

In other economic news, durable goods orders rose 0.5% ex-transportation, and initial jobless claims fell to 236k.

The WSJ is reporting that Trump is considering announcing a new Fed Chairman early in order to light a fire under Jerome Powell to begin cutting rates. Potential candidates include  former Fed governor Kevin Warsh and National Economic Council director Kevin Hassett. Other potential candidates include former World Bank President David Malpass and Fed governor Christopher Waller.

Treasury Secretary Scott Bessent had previously said that the Administration won’t even start interviewing candidates until September. Jerome Powell’s term will run out in May. Naming a replacement early will run the risk of undermining Powell, as the replacement will be asked to weigh in on current Fed decisions by the media.

If Friday’s PCE inflation data remains benign, the pressure on the Fed to cut rates will only increase. I would expect more Fed speakers to admit that things haven’t played out the way they expected.

The July Fed Funds futures are building in a chance for a rate cut (currently the odds are about 25%) and the September futures see a 90% chance. The December futures now see 3 rate cuts as the most likely scenario. Note that even there, monetary policy will still be tight, albeit marginally.

New home sales fell 13.7% MOM and 6.3% YOY to a seasonally adjusted annual rate of 623,000. The inventory of homes for sale is about 9.8 months at the current sales pace. This represents a glut of homes for sale. The median home price rose 3.7% to $426,000, while the average home price rose 2.2%.

Given the glut of inventory, builders don’t have the pricing power to pass along any tariff-related price increases, and will just have to accept lower gross margins.

An avowed socialist has won the Democratic Primary for mayor of New York City. Rent controls will increase under his watch, which should mean bad things for multifamily investors, and his proposals for higher taxes should accelerate businesses moving to the suburbs or leaving NY altogether. Flagstar (which has a lot of exposure to NYC multi-fam) needs this like it needs another hole in its balance sheet.

Vital Statistics:

Stocks are higher this morning on no real news. Bonds and MBS are down small.

Jerome Powell testified in front of Congress yesterday and returns today. Here are his prepared remarks.

Policy changes continue to evolve, and their effects on the economy remain uncertain. The effects of tariffs will depend, among other things, on their ultimate level. Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.

The effects on inflation could be short lived—reflecting a one-time shift in the price level. It is also possible that the inflationary effects could instead be more persistent. Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored.

The FOMC’s obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem. As we act to meet that obligation, we will balance our maximum-employment and price-stability mandates, keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans.

Austan Goolsbee also admitted that tariffs have not had the expected impact on inflation yet, joining Waller and Bowman who are walking back the hawkish rhetoric. “Somewhat surprisingly, thus far, the impact of tariffs has not been what people feared,” Goolsbee said in public comments before the Milwaukee Business Journal mid-year outlook. “If we do not see inflation resulting from these tariff increases, then, in my mind, we never left what I was calling the golden path before April 2,” which could well open the door to a push toward rate cuts.”

Home prices rose 2.7% YOY in April, according to the Case-Shiller Home Price Index. New York rose the most, with prices increasing 7.9%, while Chicago and Detroit also were leaders. We are seeing the MSAs which lagged the rest of the country begin to catch up.

“The housing market continued its gradual deceleration in April, with annual price gains slowing to their most modest pace in nearly two years,” said Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices. “What’s particularly striking is how this cycle has reshuffled regional leadership—markets that were pandemic darlings are now lagging, while historically steady performers in the Midwest and Northeast are setting the pace. This rotation signals a maturing market that’s increasingly driven by fundamentals rather than speculative fervor.”

“The underlying market dynamics remain challenging but not dire. Mortgage rates sustained their mid6% range throughout April, keeping monthly payment burdens near generational highs and effectively pricing out significant segments of potential buyers. Yet housing supply remains severely constrained, with existing homeowners reluctant to surrender their sub-4% pandemic-era rates and new construction failing to meet demand. This supply-demand imbalance continues to provide a price floor, preventing the sharp corrections that some had feared.”

“We’re witnessing a housing market in transition,” Godec concluded. “The era of broad-based, rapid price appreciation appears over, replaced by a more selective environment where local fundamentals matter more than national trends. For investors and policymakers alike, this shift toward geographic divergence and moderate growth may actually represent a healthier, more sustainable trajectory than the unsustainable boom we experienced just a few years ago.”

I cannot stress this enough, but the post COVID inflation spike was driven mainly by shelter inflation, and that has been cooling for the past 2 years. We are nearly back to pre-pandemic levels.

________________________________

Automated Valuation Tools for Lenders

Home equity lenders know the benefits of using an Automated Valuation Model (AVM) when originating home equity loans and refinances. Using an AVM can greatly expedite the process and save money. These time and cost savings are passed on to the customer, leading to a better bottom line for all parties involved.

Lenders should look for a highly accurate, lending-grade AVM that combines quality data, valuation expertise, and machine learning. While some situations still require the input of an appraiser, AVMs offer another tool in the valuation toolbelt when the situation is appropriate. Clear Capital’s ClearAVM™ is one of the highest rated lending-grade AVMs on the market.

ClearAVM is approved for use in RMBS and features a Confidence threshold — meaning users don’t pay for AVMs that don’t meet their specified FSD threshold. Clear Capital pairs ClearAVM with its Property Condition Inspection (PCI) to verify a property’s condition and incorporate it into the AVM value. Using ClearAVM and PCI together delivers an IAEG- and FIRREA-compliant evaluation.

Users can also take advantage of Clear Capital’s Property Analytics API to access the AVM in prequalification and use the same lending-grade valuation until closing. The API enables users to add comparables or other property data once a file gets to underwriting — up to 90 days later.

Intuitive and easy-to-use, ClearAVM delivers accurate reports in just a few seconds. Learn more about ClearAVM or order instantly on Clear Capital’s Product Portal.

_____________________________

Mortgage applications rose 1.1% last week as purchases decreased 0.4% and refis increased 3%. “The combination of the ongoing conflict in the Middle East, current economic conditions, and last week’s FOMC meeting resulted in slightly lower Treasury rates. However, mortgage rates still edged higher but remained in the same narrow range, with the 30-year fixed rate increasing to 6.88 percent last week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications increased slightly overall driven by FHA refinances, but conventional applications saw declines over the week. The average loan size for purchase applications declined to $436,300, the lowest level since January 2025, driven by decreasing conventional purchase loan sizes.”

Vital Statistics:

Stocks are higher this morning after Donald Trump brokered a ceasefire agreement between Iran and Israel. Bonds and MBS are up.

Jerome Powell heads to the Hill today for his semiannual Humphrey-Hawkins testimony. I don’t see the prepared remarks released anywhere. I suspect the Democrats will focus on Fed independence while Republicans will advocate for lower rates.

Another Fed Governor (Michelle Bowman) set the table for rate cuts in a speech yesterday.

In considering the risks to achieving our dual mandate, I fully supported the revised characterization of uncertainty and the balance of risks in our most recent monetary policy statement, pointing to the diminished uncertainty and removing the emphasis on risks to both sides of our mandate. In my view, it was appropriate to recognize that the balance of risks has shifted. In fact, the data have not shown clear signs of material impacts from tariffs and other policies. I think it is likely that the impact of tariffs on inflation may take longer, be more delayed, and have a smaller effect than initially expected, especially because many firms front-loaded their stocks of inventories. And, all considered, ongoing progress on trade and tariff negotiations has led to an economic environment that is now demonstrably less risky. The change in our monetary policy statement appropriately incorporates this shift in the balance of risks as well as the rapid improvement in many measures of uncertainty.

As we think about the path forward, it is time to consider adjusting the policy rate. As inflation has declined or come in below expectations over the past few months, we should recognize that inflation appears to be on a sustained path toward 2 percent and that there will likely be only minimal impacts on overall core PCE inflation from changes to trade policy. We should also recognize that downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market.

It will be interesting to see if more Fed Governors start breaking ranks after Friday’s PCE Price Index report. The Street is looking for a 0.1% increase in the headline and core numbers (flat compared to April) and for the YOY number to increase to 2.3% and 2.6% respectively.

Existing home sales rose 0.8% MOM to a seasonally adjusted annual rate of 4.03 million units according to the National Association of Realtors. On a YOY basis, sales fell 0.7%. For-sale inventory increased 6.2% to 1.54 million units, which represents a 4.6 month supply at current levels. Inventory rose 20% on a YOY basis.

Activity was highest in the Northeast, where sales rose 4.2% and median home prices rose 7%. In the West, sales and prices fell.

“The relatively subdued sales are largely due to persistently high mortgage rates. Lower interest rates will attract more buyers and sellers to the housing market,” said NAR Chief Economist Lawrence Yun. “Increasing participation in the housing market will increase the mobility of the workforce and drive economic growth. If mortgage rates decrease in the second half of this year, expect home sales across the country to increase due to strong income growth, healthy inventory, and a record-high number of jobs.”

The increase in inventory is encouraging because it demonstrates the decline in the rate lock-in effect.

Vital Statistics:

Stocks are flattish after the US struck Iranian nuclear facilities over the weekend. Bonds and MBS are up.

The week ahead will have plenty of data to chew on, with existing home sales, new home sales, new home sales, and home prices. Jerome Powell heads to the Hill for his semiannual Humphrey-Hawkins testimony on Tuesday and Wednesday, and we have a slew of Fed speakers all week. Finally, we get personal incomes and outlays on Friday, which contain the PCE inflation numbers.

Fed Governor Chris Waller said on Friday that the Fed could start cutting rates as early as July. Breaking with the consensus of a lot of Fed watchers and policy makers, Waller said that he doesn’t expect tariffs to boost inflation significantly, so policy makers should start considering rate cuts.

“We’ve been on pause for six months, thinking that there was going to be a big tariff shock to inflation. We haven’t seen it. We follow the data,” Waller said. “I’ve been arguing since a year ago that central banks should be looking through this.”

“If you’re starting to worry about the downside risk [to the] labor market, move now, don’t wait,” he said. “Why do we want to wait until we actually see a crash before we start cutting rates? So I’m all in favor of saying maybe we should start thinking about cutting the policy rate at the next meeting, because we don’t want to wait till the job market tanks before we start cutting the policy rate.”

“I think we’re in the position that we could do this as early as July,” Waller said during a “Squawk Box” interview with CNBC’s Steve Liesman. “That would be my view, whether the committee would go along with it or not.”

Kudos to Waller for saying the Fed should focus on the actual data and not “what-ifs” when setting monetary policy. If the PCE print on Friday turns out to be benign, I suspect we will start to see more doves on the Fed speak out about cutting rates, although it will be interesting to see if there are any dissents in July when the Fed maintains rates at current levels.

The Fed’s Humphrey-Hawkins testimony will be interesting, since the Trump Administration is urging lower rates. Will liberal stalwarts like Elizabeth Warren and Bernie Sanders continue to advocate for lower rates or will they focus on something else, like banking regulation?

The Index of Leading Economic Indicators fell in May, according to the Conference Board. “The LEI for the US fell again in May, but only marginally,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “The recovery of stock prices after the April drop was the main positive contributor to the Index.  However, consumers’ pessimism, persistently weak new orders in manufacturing, a second consecutive month of rising initial claims for unemployment insurance, and a decline in housing permits weighed on the Index, leading to May’s overall decline. With the substantial negatively revised drop in April and the further downtick in May, the six-month growth rate of the Index has become more negative, triggering the recession signal. The Conference Board does not anticipate recession, but we do expect a significant slowdown in economic growth in 2025 compared to 2024, with real GDP growing at 1.6% this year and persistent tariff effects potentially leading to further deceleration in 2026.”

So the main positive driver for the LEI was the rebound in the stock market, which isn’t really an economic indicator. The index would look worse if economic indicators were the only input.

Marketing Tools for mortgage companies

I am accepting ads for this blog if you would like to make an announcement, highlight something your company is offering or want more visibility. I am running a special for new clients as well. I offer white-label services which give you the ability to use this content for your own daily emails. The blog has thousands of subscribers / followers and an open rate around 50%. Please feel free to reach out to brent@thedailytearsheet.com if you would like to discuss this further.

Vital Statistics:

Stocks are flattish this morning as investors return from the Juneteenth holiday. Bonds and MBS are down.

As expected the Fed maintained interest rates at current levels, and cut its forecast for the number of rate cuts in 2025 again. If you look at the consensus dot plot, it seems there are two major groups: those that think the Fed won’t cut rates at all this year, and those that think the Fed will deliver two cuts:

In the table of economic projections, they took down their estimate for GDP growth from 1.7% to 1.4%, and bumped up their estimate for end-of-year core PCE growth from 2.8% to 3.1%. The estimate for unemployment was raised from 4.4% to 4.5%. In the press conference, Jerome Powell said the Fed expects a “meaningful” amount of inflation in the coming months.

Meanwhile Trump expressed his disappointment in Powell, saying: “What I’m going to do is, you know, he gets out in about nine months, he has to, he gets fortunately terminated … I would have never reappointed him, (President Joe) Biden reappointed him. I don’t know why that is, but I guess maybe he was a Democrat… he’s done a poor job,” Trump said. FHFA Director Bill Pulte said that Powell should resign.

Powell cites the strength of the labor market as his justification for keeping policy tight. Fair enough. That said, if you focus solely on one data point in the labor market – the unemployment rate – the labor market looks strong. But if you peek behind the curtain, the internals paint a different picture. Job growth has been driven by demographic statistical adjustments and not paychecks, while previous months have been quietly revised downward. The declining unemployment rate is being driven by a decrease in the labor force, which is not the way you want to do it. It isn’t job growth that is driving it – it is discouraged unemployed workers throwing in the towel.

I think the Fed has gone from its role of reacting to data to one where it is making bets, and that really isn’t their bailiwick. It would be one thing if the Fed Funds rate was at r* or the neutral rate, but it isn’t. The Fed is 100 basis points over r* when the current economic data says they should be neutral. At this point the Fed needs inflation to spike or else they will be making a major policy mistake. Powell is essentially drawing into an inside straight.

Bayview Asset Management is buying Guild Mortgage for an equity value of $1.3 billion. In the latest 10-Q, Guild is valuing the servicing portfolio for the same amount, so Bayview is paying little for the retail origination arm.

“Expanding the Guild relationship with Lakeview creates one of the strongest and most compelling mortgage origination and servicing ecosystems in the nation,” said Guild Chief Executive Terry Schmidt. “Our expertise in distributed retail origination, retained servicing, and the customer-for-life balanced business model makes this a complementary partnership that has powerful potential for growth and innovation.”

“We are pleased to forge a stronger strategic partnership between Lakeview and Guild through this transaction, and look forward to expanding opportunities and delivering exceptional service to our customers,” said Juan Gonzalez, Managing Director and CEO of Lakeview Originations. “With each company’s different strengths and areas of expertise, this collaboration will form one of the most dynamic mortgage origination and servicing platforms in the industry.”

“We are excited for this next chapter of the Guild story,” said Guild Holdings Chairman Patrick Duffy. “The entire board of directors is confident that Bayview will be an excellent steward of this exceptional company and a great platform for continued growth.”

Vital Statistics:

Stocks are flattish as we await the Fed decision at 2:00 pm. Bonds and MBS are up.

The FOMC decision will be released at noon. The markets don’t expect the Fed to make any changes to the Fed Funds rate, however most of the action will be in the economic projections, particularly the inflation rate and the dot plot. The March dot plot saw a total of 2 rate cuts this year, and that was pre-Liberation Day. They saw headline PCE inflation at 2.7% and core PCE inflation at 2.8%. The April numbers saw headline PCE inflation at 2.1% and core PCE inflation at 2.5%. It will be interesting to see how much the Fed changes this forecast.

The housing construction market continues to struggle as buyers are stuck with affordability issues. Housing starts came in at a 1.256 million annual pace last month, while building permits came in at a 1.39 million pace. These numbers were well below expectations.

The starts number was roughly flat on a MOM basis and down about 7.3% on a YOY basis. The MOM decrease was largely attributable to a big decline in multi-family construction, while the YOY decline was due to single family.

Unsurprisingly, homebuilder sentiment remains dour, with the NAHB Housing Market Index hitting the third lowest reading in 13 years. Homebuilders are increasingly using incentives (i.e. price cuts or upgrade freebies) to move the merchandise. Given this state of affairs, it is highly unlikely that any tariff impact will be passed on to consumers – builders will just have eat the increases and suffer lower margins. This is a big driver for the problems we are seeing in housing starts overall.

“Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices.”

“Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets,” said NAHB Chief Economist Robert Dietz. “Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025.”

Mortgage applications fell 2.6% last week as purchases fell 5% and refis fell 2%.

“Mortgage rates decreased last week, driven by financial market volatility caused by current geopolitical conflict and ongoing tariff uncertainties. The 30-year fixed rate decreased to 6.84 percent, its lowest level since April,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Even with lower average mortgage rates, applications declined over the week as ongoing economic uncertainty weighed on potential homebuyers’ purchase decisions.”

Added Kan, “Refinance activity declined for both conventional and government borrowers. VA applications, however, bucked the trend with a 2 percent increase in purchase applications and a slight increase in refinance applications. Additionally, the overall average loan size at $380,200, was the lowest since January 2025.”

________________________________

Loan Officers Wanted

SO YOU THINK YOU CAN SELL?

Put your talents to work at Ark Mortgage, a regional mortgage lender with an unmatched product line and excellent brand presence. Ark is looking for new Loan Officers for their existing branches and Sales Managers for new offices. Ark is licensed in NY, NJ, AZ, CA, CO, CT, FL, and TX.

Already licensed — Take it to the next level with a boutique lender that rewards ambitious professionals with hands-on operations support, artful marketing, and the industry’s highest commissions. The perfect place for motivated loan officers to grow their impact and their income.

Not licensed but ready to learn — Ark offers free, zero-to-sixty loan officer training for motivated individuals with a proven aptitude for outbound sales. This could be the start of a highly lucrative career with that pays top commissions, with premium operations support and powerful marketing tools.

Email hr@arkmortgage.com with a bit about yourself and what you’d like to accomplish. Ark Mortgage NMLS# 103915  

Vital Statistics:

Stocks are lower this morning as we begin the June FOMC meeting. Bonds and MBS are up.

Retail sales fell 0.9% MOM, according to the Census Bureau. This was well below the consensus estimate of a 0.6% decrease. If you strip out vehicles and gas, retail sales fell 0.3% versus a 0.2% increase.

March and April retail sales were revised downward from 0.1% to -0.1%. Separately, import prices were flat MOM and up 0.2% on a YOY basis.

Homebuilder Lennar posted lower-than-expected earnings, however revenues beat estimates. The company’s forecast for deliveries came in light, and we are seeing evidence of pricing pressures as the company’s average selling price fell and margins contracted.

Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, said, “While we continue to see softness in the housing market due to affordability challenges and a decline in consumer confidence, we adhered to our strategy of driving starts, sales, and closings in order to build long-term efficiencies in our business. Reflecting softer market conditions, our average sales price, net of incentives, declined to $389,000. As mortgage interest rates remained higher and consumer confidence continued to weaken, we drove volume with starts while incentivizing sales to enable affordability and help consumers to purchase homes.”

Shelter inflation has been the biggest driver of overall inflation over the past few years, and if Lennar’s report is any indication tariffs will have no effect on shelter inflation. The builders probably cannot pass on increased prices to home buyers, so they will probably have to eat them, which means lower margins going forward.

The Empire State Manufacturing Survey showed activity continued to contract in New York State, however the pessimism is beginning to abate. “Business activity continued to contract in New York State in June. However, employment grew slightly for the first time in several months. Firms also turned positive about the outlook for future business conditions, expecting activity to increase in the months ahead.”

So, while the Fed is expected to hold rates at the current range of 4.25% – 4.5%, the economic backdrop is deteriorating. The decline in retail sales shows that consumption is struggling, and the employment statistics are sending worrisome signals.

Meanwhile, inflation is almost to the target and Fed is running out of excuses to keep rates 100 basis points too tight. The Fed is making a bet that inflation will spike from tariffs, and that will dominate all other economic effects. At this point, they are not being cautious – they are being obstinate.

Tools for Mortgage Originators

Are you a mortgage originator with a bookkeeper, but no financial analyst? Are you doing without an annual budget because you don’t have the time / resources to develop one? Are you considering an acquisition, and want an in-depth analysis of the potential synergies and impact on the bottom line? Perhaps you have some projects that need to be done, but you can’t justify a full-time hire.

I am a consultant who has extensive experience in capital markets, secondary marketing, FP&A, budgeting, and servicing. If you think you might have a need, let’s set up a discovery call. 

Please reach out to brent@thedailytearsheet.com

Vital Statistics:

Stocks are higher this morning as we begin Fed Week. Bonds and MBS are down.

Despite the hostilities between Israel and Iran, we are not seeing any flight-to-safety bid in the bond market.

The week ahead will be dominated by the FOMC meeting on Tuesday and Wednesday. We won’t have much in the way of market-moving data, but we will get some housing data with housing starts and the NAHB Housing Market Index. Retail Sales and Leading Indicators are also on the menu. Markets will be closed on Thursday for the Juneteenth holiday.

We also have the G7 meeting this week to discuss trade.

Consumer sentiment improved in in early June, according to the University of Michigan Consumer Sentiment Survey. The index improved 16% compared to May, but is still down about 20% from December 2024. The shock of the Liberation Day tariffs is wearing off. Notably, inflation expectations improved dramatically: Year-ahead inflation expectations fell from 6.6% to 5.1%. Longer-run inflationary expectations moderated as well.

Median down payments fell for the first time in two years, according to research from Redfin. The typical down payment fell 1% to $62,468. In percentage terms, the down payment rose 1% to 15.1%.

“The buyers who are moving forward today are being very careful with their finances because with housing costs near record highs, they’re typically spending a big portion of their paycheck to buy a home. I’m seeing an uptick in first-time buyers looking for starter homes,” said Fernanda Kriese, a Redfin Premier agent in Las Vegas. “Combine that with concerns about layoffs and a potential recession, and people are doing things like cross-comparing mortgage origination fees, shopping around for lenders, and looking into down-payment assistance.”

Housing inventory is increasing, and the market is becoming more in favor of buyers than sellers. New listings rose 5.2% YOY and active inventory is up 27.7% year-over-year. Days on market has increased by 6 days, while home prices are essentially flat.

Vital Statistics:

Stocks are lower this morning after Israel attacked Iran. Bonds and MBS are up.

Oil is up big this morning after Israel attacked Iran‘s nuclear facilities and weapons factories. President Trump warned Iran to make a deal: “They should now come to the table to make a deal before it’s too late. It will be too late for them. You know the people I was dealing with are dead, the hardliners,” the president said. He would not specify which people he was referring to.

The attack on Iran is boosting the US dollar and putting a bid under oil and the 10 year bond. North Sea Brent futures are up about 7%, while WTI is up 8% in sympathy.

We had another successful bond auction yesterday, where Treasury auctioned off $22 billion of 30 year bonds. Demand was strong again, with a bid-t0-cover ratio of 2.43.

The MBA applauded the Senate’s bill to end abuses of trigger leads, which can cause a barrage of unsolicited calls to an unsuspecting borrower on a credit pull.

“The Senate passage of this important bill, following similar legislation advancing in the House Financial Services Committee earlier in the week, is an enormous step toward finally putting a stop to trigger lead abuses.

“We commend Senators Jack Reed (D-RI) and Bill Hagerty (R-TN), as well as the bill’s dozens of bipartisan cosponsors, for their continued leadership on this issue – a top MBA advocacy priority.  

“MBA looks forward to working with the sponsors and House and Senate leadership to reconcile the slight differences in the two bills so that one bill can be passed in both chambers and signed into law as quickly as possible.” 

Inputs for housing construction rose 0.2% MOM in May after falling 0.2% MOM in April, according to an analysis of yesterday’s producer price index from the NAHB. On a year-over-year basis they increased 1.9%. The goods component – i.e. sticks and bricks – rose 1.6% while the services component rose 2.3%.

If there is any sort of tariff-related increase in housing construction, it isn’t evident in the latest numbers or the graph below:

Vital Statistics:

Stocks are lower this morning on no real news. Bonds and MBS are up.

Inflation at the wholesale level rose 0.1% MOM and 2.6% YOY. This was better than expected. Final demand less food, energy, and trade services rose 0.1% MOM and 2.7% YOY. This was again below expectations. We are seeing bond yields fall in the aftermath.

Separately, initial jobless claims increased to 248k last week, a sign the labor market is weakening.

None of this will matter to the Fed, which will maintain interest rates at current levels next week. Note that the Fed Funds futures are pricing in a miniscule probability of a rate hike.

Bonds rallied yesterday on the softer-than-expected CPI release. Bonds rallied further after strong demand in the 10 year bond auction. The Treasury sold $39 billion worth of 10 year bonds at 4.421% yield and a 2.52 bid-to-cover ratio indicating strong demand. We have a $22 billion 30-year auction set for today.

The Trump Administration said that deals were “rocking” with several countries including China, South Korea, and about 13 others. The EU has proven to be “thorny” and will probably be dealt with last. Trump said he was “vary happy” with China.

The US budget deficit hit $316 billion in May, down 9% from a year ago. Tax revenues were up 15% while spending was up about 8%. There was a jump month-over-month due to a small surplus in April tied to tax receipts. Interest on the debt continues to consume a larger part of the budget, falling behind Medicare and Social Security as the biggest expenditures.

Lock volume fell 5% last week according to MCT. The decline was driven by rate / term refis. Purchase volume was down about a percent. “I view the consistency in purchase activity as a good thing,” said Andrew Rhodes, Senior Director and Head of Trading at MCT. “Rates are still elevated, affordability remains a challenge, and yet we’re seeing steady demand. That tells me there’s still momentum in the market, even if it’s cautious.”

Marketing Tools for mortgage companies

I am accepting ads for this blog if you would like to make an announcement, highlight something your company is offering or want more visibility. I am running a special for new clients as well. I offer white-label services which give you the ability to use this content for your own daily emails. The blog has thousands of subscribers / followers and an open rate around 50%. Please feel free to reach out to brent@thedailytearsheet.com if you would like to discuss this further.