WTMS Blog Today = What’s up in Mortgage Today (AM) – 10/21/2025

Bonds are experiencing a strange combination of excitement and boredom this morning, with markets showing measured optimism. The Philadelphia Fed Non-Manufacturing Business Activity plunged to -22.2 from -12.3 previously, signaling significant weakness in the services sector. Employment dropped sharply to -4.5 from positive 9.4, while new orders fell to -17.4 from 0.5 previously.

This economic data is creating favorable conditions for mortgage originators as Treasury yields decline. U.S. Treasuries began the week quietly with modest strength pushing 30-year yields to their lowest level since early April.

The 10-year yield has retreated to 3.958% after closing yesterday at 3.99%, while the 2-year remains largely unchanged at 3.46%. Despite dipping to 3.93% during Friday’s session, 10-year yields failed to close below 4.0% and remain range-bound ahead of this Friday’s CPI release. Agency MBS prices are showing slight improvement from Monday’s close with no substantive news driving the movement.

UMBS securities are performing well with the 5.0 coupon up 13 basis points and trading above par at 100.03. The 5.5 coupon gained 6 basis points to 101.28, while the 6.0 coupon rose 2 basis points to 102.39. GNMA securities showed mixed performance with the 5.0 coupon gaining 15 basis points but the 5.5 and 6.0 coupons declining slightly.

Non-QM lending continues gaining market share from the Agencies as lenders seek higher-yield products. Many companies with increased non-QM production are selling loans primarily on best-efforts basis to aggregators who quickly securitize or portfolio the products. Lenders are pushing their own guidelines to counterparties hoping for slight advantages in primary markets, while maintaining careful fraud oversight especially with DSCR products.

This trend represents a significant shift as government officials assure the MBA that any move away from conservatorship will minimize mortgage rate increases.

Locking vs Floating

Risk-averse clients are remaining in lock mode as rates continue flirting with longer-term lows. Risk-tolerant clients are enjoying the absence of major corrections while waiting for more negative volatility to force their hand.

The trend remains favorable until market conditions change significantly. MBS prices help with intraday risk, but 10-year yield ceilings and floors help track bigger picture bond market momentum.

Today’s Events

– Philly Fed Non-Manufacturing Business Activity: -22.2 vs -12.3 prev
– Employment: -4.5 vs +9.4 prev
– New orders: -17.4 vs +0.5 prev
– Prices: 35.8 vs 38.8 prev

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 100.03 | 0.13 |
| 5.5 | 101.28 | 0.06 |
| 6.0 | 102.39 | 0.02 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.95 | 0.15 |
| 5.5 | 100.93 | -0.01 |
| 6.0 | 101.83 | -0.04 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.443 | 100.11 | -0.015 |
| 3 yr | 3.442 | 100.164 | -0.02 |
| 5 yr | 3.549 | 100.347 | -0.023 |
| 7 yr | 3.73 | 100.884 | -0.028 |
| 10 yr | 3.954 | 102.425 | -0.025 |
| 30 yr | 4.541 | 103.399 | -0.029 |