The bond market saw an improvement with 10yr yields dropping about 5bps on Thursday due to some flight-to-safety buying on another round of regional bank short selling. The S&P SPDR regional bank ETF is down 38% YTD. PacWest was the focus of most of those headlines due to a big drop in deposits. In separate news, Jamie Dimon is out this morning saying commercial real estate could take a few more banks down. On the other hand, rates will improve, albeit at a snail’s pace, as long as markets believe the Fed will not only have to pause hiking rates in June but will have to start cutting rates in July. Western Alliance gave an update on its deposit situation with total deposits of 49.4 billion. PacWest said that deposits fell by 9.5% in the week ended May 5. There are currently a massive amount of people shorting the 10 yr treasury. At the end of the day, the MBS were up 11 bps. Stocks were down 7, and 10 yr treasury was down 5.
In deal news, Mr. Cooper Group announced it will buy what’s left of Home Point Capital and its roughly $89.0 billion mortgage servicing portfolio for $324 million in cash in the third quarter. Home Point operations will be shut down after closing. Mr. Cooper Group will assume $500 million in outstanding Home Point 5 percent Feb. 2026 notes, valued at $400 million. Mr. Cooper is currently the nation’s eighth-largest owner of mortgage servicing rights at $400 billion and will pass Freedom Mortgage when the deal closes.