WTMS Blog Today = What’s up in Mortgage Today (AM) – 12/23/2025

Holiday trading distortion strikes again as Q3 GDP data sent mortgage bonds tumbling despite thin market conditions. GDP came in at 4.3% versus the 3.3% forecast, triggering a sharp selloff that seems outsized for the relatively stale data. The movement in bonds is much larger than typical reactions to major reports like jobs or CPI, but trading volume is less than half the usual size.

Market experts warn this is classic holiday volatility at work. When fewer traders participate, smaller data points can create exaggerated price swings that wouldn’t happen during normal trading periods. The underlying GDP details suggest the economy was “fairly strong” rather than a true barn burner, with real final sales to domestic purchasers at just 2.9%.

UMBS securities dropped nearly a quarter point while 10-year yields pushed toward the ceiling of their 4-month range. The 30-year UMBS 5.0 coupon fell 22 basis points to 99.43, directly impacting the rates you can offer borrowers today. This selloff coincided with weaker-than-expected ADP employment data showing just 11.5K new jobs versus 16.25K previously.

Mortgage originators should expect rate volatility to continue through the holiday period. With most institutional traders away until January, even routine economic releases can trigger outsized market reactions. The next major test for consequential volatility won’t come until the first week of January when normal trading volumes return.

Locking vs Floating

We’re entering peak holiday mode for bond markets, creating wider price swings that can happen without apparent reason. Markets typically drift sideways during late December, but this year’s GDP reaction shows how unpredictable holiday trading can be. The next risk for major volatility from scheduled events won’t arrive until early January.

MBS prices dropped 1-2 ticks while 10-year yields climbed roughly 1 basis point to 4.169% by mid-morning. For loans closing within 30 days, the current environment favors locking given the potential for random holiday volatility.

Today’s Events

– ADP Employment Change Weekly: 11.5K vs 16.25K previous
– Core CapEx (October): 0.5% vs 0.9% previous
– Core PCE Prices Q3: 2.90% vs 2.6% previous
– Corporate Profits Q3: 4.4% vs 0.2% previous
– Durable Goods (October): -2.2% vs 0.5% previous
– Industrial Production (October): -0.1% vs 0.1% previous
– Industrial Production (November): 0.2% vs -0.1% previous
– Consumer Confidence (December): 89.1 vs 88.7 previous

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.43 | -0.22 |
| 5.5 | 101.16 | -0.08 |
| 6.0 | 102.48 | -0.03 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.45 | -0.22 |
| 5.5 | 100.81 | -0.03 |
| 6.0 | 101.74 | 0.02 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.539 | 99.925 | 0.04 |
| 3 yr | 3.589 | 99.749 | 0.038 |
| 5 yr | 3.745 | 99.456 | 0.03 |
| 7 yr | 3.95 | 98.789 | 0.024 |
| 10 yr | 4.18 | 98.538 | 0.021 |
| 30 yr | 4.845 | 96.538 | 0.008 |