WTMS Blog Today = What’s up in Mortgage Today (AM) – 12/11/2025

Bond markets are building on yesterday’s post-Fed rally as traders digest this morning’s jobless claims data. Initial claims jumped to 236,000 versus expectations of 220,000, marking the largest increase since 2020. The dramatic swing is largely due to seasonal adjustment issues caused by the late Thanksgiving holiday this year.

UMBS 5.0 coupons are trading 13 basis points higher at 99.54. The employment data tells a complex story beneath the surface volatility. Non-seasonally adjusted continued claims are running at the highest levels in years, which could signal underlying labor market weakness.

Bonds appear to be focusing on this softer employment picture rather than the headline noise. Treasury yields are down across the curve, with the 10-year falling to 4.11%. Yesterday’s Fed rate cut continues to provide market support.

Chair Powell signaled the central bank is now in neutral territory with limited room for further cuts. The Fed also announced plans to purchase $40 billion in Treasury bills over the next month to ease liquidity strains. This technical buying adds another layer of support for bond prices.

MBS prepayment dynamics remain favorable for originators in the current rate environment. Larger-balance pools are paying slowly due to limited seasoning and high refinancing costs. Lower-balance pools in the 175k-275k range appear most attractive as they age beyond 12 months.

Servicers like Rocket, AmeriHome, and Freedom continue to be key determinants of prepayment outcomes.

Locking vs Floating

The friendly reaction to yesterday’s Fed announcement helps reinforce the prevailing trading range. Risk-tolerant clients should use the ceiling of the range as a lock trigger while risk-averse clients can capitalize on today’s mid-day price improvements.

Volatility risk decreases over the next few days but will pick back up leading up to the December 16th jobs report.

Today’s Events

– Jobless Claims: 236k vs 220k forecast
– Continued Claims: 1838k vs 1950k forecast

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.54 | 0.13 |
| 5.5 | 101.14 | 0.09 |
| 6.0 | 102.41 | 0.01 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.75 | 0.11 |
| 5.5 | 100.96 | 0.14 |
| 6.0 | 101.7 | 0.03 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.516 | 99.97 | -0.029 |
| 3 yr | 3.555 | 99.846 | -0.035 |
| 5 yr | 3.694 | 99.687 | -0.041 |
| 7 yr | 3.889 | 99.154 | -0.043 |
| 10 yr | 4.114 | 99.072 | -0.039 |
| 30 yr | 4.76 | 97.852 | -0.033 |