WTMS Blog Today = What’s up in Mortgage Today (AM) – 11/06/2025

Mortgage markets experienced a sharp turnaround this morning after showing early strength. UMBS securities rallied 27 basis points at the open before selling pressure emerged. The 10-year Treasury yield dropped to 4.097% during intraday trading, giving mortgage originators a brief window of improved pricing.

Employment data continues to dominate market sentiment as conflicting signals create uncertainty. ADP reported 42,000 jobs added in October, beating the 25,000 forecast, while Challenger Gray & Christmas showed 153,000 job cuts for the same period. This mixed employment picture is keeping Federal Reserve rate cut expectations volatile, with December odds fluctuating around 60%.

ISM Services data came in stronger than expected across multiple components. Business Activity jumped to 54.3 from 49.9, while New Orders surged to 56.2 versus the 51.0 forecast. The Services Prices index hit 70.0, above the 68.0 estimate, adding to inflation concerns that could influence Fed policy decisions.

The Bank of England held rates steady at 4.0% in a close 5-4 vote, with four members favoring cuts. This decision provides some context for U.S. monetary policy as central banks globally navigate similar economic crosscurrents.

Treasury curve steepening continued as longer-term yields adjusted to growth expectations.

Locking vs Floating

Wednesday morning’s volatility delivered higher rates rather than the hoped-for rally. The combination of stronger-than-expected economic data adds to the prevailing upward trend in rates since October 29th.

Even risk-tolerant clients should wait for a firm rejection of this rate increase pattern before returning to typical float strategies. The morning’s sharp MBS rally provided temporary relief, but the overall trajectory remains concerning for rate improvement.

Today’s Events

– ADP Employment: 42k vs 25k forecast, -32k previous
– ISM Business Activity (Oct): 54.3 vs forecast unavailable, 49.9 previous
– ISM Non-Manufacturing PMI (Oct): 52.4 vs 50.8 forecast, 50.0 previous
– ISM Services Employment (Oct): 48.2 vs 47.6 forecast, 47.2 previous
– ISM Services New Orders (Oct): 56.2 vs 51.0 forecast, 50.4 previous
– ISM Services Prices (Oct): 70.0 vs 68.0 forecast, 69.4 previous

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.59 | 0.31 |
| 5.5 | 101.08 | 0.16 |
| 6.0 | 102.27 | 0.06 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.76 | 0.25 |
| 5.5 | 100.87 | 0.12 |
| 6.0 | 101.76 | 0.07 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.574 | 99.858 | -0.06 |
| 3 yr | 3.585 | 99.761 | -0.063 |
| 5 yr | 3.696 | 99.677 | -0.069 |
| 7 yr | 3.882 | 99.958 | -0.069 |
| 10 yr | 4.096 | 101.252 | -0.065 |
| 30 yr | 4.691 | 100.94 | -0.049 |