WTMS Blog Today = What’s up in Mortgage Today (AM) – 11/04/2025

Stock market turmoil provided an unexpected boost for bonds this morning as tech giants led a broad selloff. Palantir Technologies tumbled over 7% despite beating earnings expectations, while Tesla and Nvidia dragged the “Magnificent Seven” megacaps lower. Treasury yields reversed course and fell as investor appetite for risk-off trades gained momentum across global markets.

The 10-year Treasury yield dropped to 4.08%, down from Monday’s close of 4.11%, giving mortgage originators their first meaningful relief in weeks. UMBS 5.0 coupons climbed 5 basis points to 99.50, with GNMA securities following suit as heavy stock selling triggered the classic flight-to-quality trade. However, this morning’s gains remain fragile, as stocks have shown resilience in recent hours and could quickly reverse bond momentum.

Federal Reserve officials sent mixed signals about December’s policy direction, adding uncertainty to an already volatile trading environment. Vice Chair for Supervision Bowman emphasized persistent inflation risks while other officials pointed to growing labor market fragility. The ongoing government shutdown has left traders flying blind without key economic data, creating additional hesitation among bond buyers who typically step in during equity selloffs.

Why are mortgage rates still elevated despite last week’s Fed cut? Industry experts point to corporate bond issuance, particularly from tech giants funding AI infrastructure projects. These companies are selling Treasuries to finance corporate debt, creating additional selling pressure on government bonds.

Meanwhile, the broader market believes the economy remains steady enough for the Fed to potentially skip a December rate cut.

Locking vs Floating

With rates at three-week highs entering this week, risk-takers are looking for evidence that the upward momentum has peaked. Wednesday’s ISM Services data represents the week’s biggest source of potential volatility.

MBS prices help manage intraday risk, but 10-year yield levels provide better insight into broader bond market trends.

Today’s Events

No major economic data releases scheduled due to government shutdown. Fed Vice Chair for Supervision Bowman scheduled to speak.

Royal Bank of Australia expected to hold rates steady at 3.60%.

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.55 | 0.09 |
| 5.5 | 101.05 | 0.05 |
| 6.0 | 102.26 | 0.01 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.72 | 0.08 |
| 5.5 | 100.84 | 0.04 |
| 6.0 | 101.75 | 0 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.574 | 99.859 | -0.031 |
| 3 yr | 3.581 | 99.771 | -0.031 |
| 5 yr | 3.692 | 99.699 | -0.029 |
| 7 yr | 3.875 | 100.001 | -0.03 |
| 10 yr | 4.083 | 101.358 | -0.024 |
| 30 yr | 4.666 | 101.347 | -0.021 |