WTMS Blog Today = What’s up in Mortgage Today (AM) – 03/02/2026
March has opened with a sharp selloff as mortgage-backed securities stumble out of the gate this morning. UMBS 4.5 coupons dropped 41 basis points while the 10-year Treasury yield surged to 4.01%, raising questions about whether geopolitical tensions with Iran are driving the volatility. After February’s remarkable rally where bonds seemingly couldn’t lose, this morning’s reversal marks a stark shift in momentum.
The culprit behind today’s weakness is hotter-than-expected inflation data from January’s Producer Price Index report. Core PPI jumped 0.8% month-over-month, nearly triple the 0.3% forecast and a clear acceleration from December’s 0.7% reading. This wholesale inflation surprise hit markets at 7:00 AM, triggering immediate selling pressure that pushed MBS prices down over a quarter point in early trading.
Treasury yields climbed across the entire curve, with the benchmark 10-year note rising 6.2 basis points and shorter-term notes posting even steeper gains. The 7-year Treasury led losses with a 7.3 basis point increase, while the 30-year bond rose 5 basis points to 4.67%. When Treasury yields move higher like this, mortgage rates typically follow within the next 24 to 48 hours, meaning rate sheets could worsen this afternoon or tomorrow morning.
GNMA securities also felt the pressure, though slightly less severe than their UMBS counterparts. The GNMA 4.5 coupon fell 29 basis points compared to UMBS 4.5’s 41-basis-point decline. Higher coupons held up better across both securities, with UMBS 5.5 dropping only 16 basis points, reflecting the typical pattern where lower coupons experience more volatility during selloffs.
Locking vs Floating
February’s bond rally may have been partially driven by month-end technical trading, which means some selling pressure this week could be unrelated to economic fundamentals. However, data will ultimately set the tone, especially with Friday’s critical jobs report on the horizon. The sharp PPI miss this morning suggests inflationary pressures remain stubborn, creating risk for borrowers who remain floating.
Given that MBS prices have dropped over a quarter point already today, deals closing within the next two to three weeks should strongly consider locking to protect against further deterioration.
Today’s Events
– Core PPI m/m (Jan): 0.8% vs 0.3% forecast, 0.7% previous
– PPI m/m (Jan): 0.5% vs 0.3% forecast, 0.5% previous
– PPI y/y (Jan): 2.9% vs 2.6% forecast, 3% previous
Bond Pricing
UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.2 | -0.29 |
| 5.5 | 101.46 | -0.16 |
| 5.0 | 100.13 | -0.25 |
GNMA 30 yr
| Coupon | Price | Intra-Day Change |
Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.438 | 100.118 | 0.056 |
| 3 yr | 3.441 | 100.166 | 0.058 |
| 5 yr | 3.571 | 100.815 | 0.063 |
| 7 yr | 3.774 | 101.381 | 0.073 |
| 10 yr | 4.01 | 99.921 | 0.062 |
| 30 yr | 4.67 | 99.278 | 0.05 |
