Bessent's bond buyback busted, barely bumping bonds backwards, but Barr's bombshell bumped bonds bigly.

Let's dive in.

Bonds: Despite Bessent's bond program starting on September 3rd, on Wednesday the 10 year jumped 13BPS in a single day to the highest level since 2007.

Naturally, applications are down 3% for refi's and 1% for purchases, and Freddie recorded the 30 year fixed at 7.03%, up 8BPS for the week and 73BPS higher than this time last year.

The other news for the week was more lukewarm: New Home Sales for August were up 6.4% for the month, and initial jobless claims were at 197K essentially flat.

What really moved the market? Oil bumping up as Houthis continue causing instability in the middle east, combined with Barr's commentary.

Barr delivered a speech to a housing conference in Chicago. Significantly, he shared that the Fed had been "out of position" and more bumps were needed to bring inflation under control. An October rate hike is now up to 75%, even with midterms, and Fed Futures now factor in 3 more increases before next June.

CFPB Reform Act: This passed the first House Committee, but still has 3 more committees to go before we hit the House, Senate, and Trump himself. The approval was strictly along party lines, with no Democrats in favor. Since this is now unlikely to happen until November, if Midterms swing then this is probably a moot point. However, it's worth looking into what the future of the CFPB might look:

1.) Funding: The biggest is no more transfers in funding from the Fed. Additionally they would NOT keep funds between years. No more piggy bank. Penalties and violations would go back to victims, and extra would go back to the Treasury. Result: CFPB would be far more cash-strapped than the prior forms.

2.) Ruling: Ruling would now be reviewed every 8 years by the OMB. They would check to make sure it's actually making an impact. There would be no monetary cure if a good-faith effort is made by the company, and there would be a 180 day cure period. The cap would now be at about $50K/day versus $1M, so much smaller penalties. Penalties would only be applied if violations were knowing and reckless, and only if there was "substantial injury".

Result? Way, way less fines.

3.) States: If the CFPB is investigating or enforcing, states aren't allowed to pile on.

My biggest concern? That 8 year OMB rule would mean we'd have TRID, ATR/QM, and other mainstays up for reviews every 8 years. Woof.