Morning Report: The war between UWM and Rocket heats up

Vital Statistics:


  Last Change
S&P futures 3847 6.4
Oil (WTI) 65.60 -0.56
10 year government bond yield   1.59%
30 year fixed rate mortgage   3.22%

Stocks are flattish this morning on no real news. Bonds and MBS are flat.


The upcoming week is relatively data-light and we are entering the quiet period ahead of next week’s FOMC meeting. Hopefully that means less bond market volatility.


The spending bill is set to pass the House this morning. The stimulus bill has economists taking up their GDP estimates and lowering unemployment forecasts. Supposedly we are seeing record short positions in the US Treasury bond.


One thing that seems interesting to me is that we aren’t seeing a huge increase in corresponding sovereign yields. The latest spike in the US Treasuries is not being observed in German Bunds, Japanese Government Bonds or UK Gilts. This makes me skeptical on the inflation story. If we were really seeing inflationary pressures build, it would be a global phenomenon, and rates would be rising in lockstep (or at least correlating more than they are).

The issue appears to be the Supplemental Liquidity Ratio issue (which I admittedly don’t really understand). It stems back from measures taken back in the early days of COVID which were intended to make banks more likely to lend. It is coming up for expiration, and many on the left want to see it go away, as they consider it a sop to the banks. On the other hand, Democrats certainly can’t like the movement in Treasuries, as rising rates will depress the economy.


Prior to the Biden inauguration, Treasury Secretary Steve Mnuchin issued a directive to FHFA which would limit investment loans guaranteed by Fannie and Fred. This was the letter that limited cash window purchases to $1.5 billion per single originator. The directive also limits investment / second home purchase activity to only 7%. That second part is controversial given that we have a housing shortage, and raising costs isn’t going to help the affordability issue out there.


The war between United Wholesale and Rocket are heating up. Note that there has been bad blood between the two Detroit lenders for a while. United Wholesale recently issued a letter to its brokers saying that they can either work with UWM or with Rocket and Fairway. A small non-scientific survey out of the National Association of Mortgage Brokers shows that 30% of brokers will comply with UWM’s request, while 41% will ignore it and another 30% would report them for anti-competitive behavior. Here is Rocket’s response.


Urban apartment prices and rents are moving in opposite directions. I think two things are happening here. Landlords are cutting rent prices to buy occupancy and actual sales transactions are depressed and sellers pull apartments off the market to wait for better days. The other wrinkle is the anti-landlord sentiment in these cities where tenants are allowed to simply not pay rent and landlords just have to deal with it. I suspect the only properties moving in these cities are the big luxury apartments and the multi-stuff is not. This would skew the numbers.

3 Responses

  1. Good reads:

    “The Prophet Of The Trump Era
    Review of Martin Gurri’s “The Revolt of the Public,” the book that called both an uprising and a reaction

    Matt Taibbi

    The thesis of The Revolt of the Public is that traditional centralized powers are losing — have lost — authority, in large part because of the demystifying effect of the Internet. The information explosion undermined the elite monopoly on truth, exposing long-concealed flaws. Many analysts had noted the disruptive power of the Internet, but what made Gurri unique is that he also predicted with depressingly humorous accuracy how traditional hierarchies would respond to this challenge: in a delusional, ham-fisted, authoritarian manner that would only confirm the worst suspicions of the public, accelerating the inevitable throw-the-bums-out campaigns. This assessment of the motive for rising public intransigence was not exactly welcomed, but either way, as Kling wrote, “Martin Gurri saw it coming.”

    “Interview with Martin Gurri, “A Short-Term Pessimist and Long-Term Optimist”
    Q&A with the author of “Revolt of the Public”

    Matt Taibbi”


    • jnc:

      Good reads:

      Agreed. Not sure I agree with this, though, from Gurri:

      The American people may be undergoing a psychotic episode, but they are fundamentally sensible.

      I hope that is true, but I am very skeptical.


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