WTMS Blog Today = What’s up in Mortgage Today (PM) – 10/01/2025**

The mortgage-backed securities market experienced significant volatility today as MBS gained 5 ticks (.16) but pulled back from earlier highs, while the 10-year Treasury yield fell 3.5 basis points to 4.113%. The bond market rally was driven by a surprise decline in ADP private payrolls, signaling potential labor market weakness. Treasury yields initially touched 4.09% lows before recovering slightly amid ongoing government shutdown concerns.

UMBS securities showed resilience despite the broader market uncertainty, with pricing holding relatively stable throughout the trading session. The Federal Reserve’s upcoming policy decisions continue to influence market sentiment, with traders pricing in a 94% probability of a 25 basis point rate cut at the October 29 meeting. Lock/float considerations favor floating for borrowers who can wait, as the weakening employment data may support further rate declines. The government shutdown that began today is expected to last at least three days, creating additional market uncertainty.

However, Treasury bonds surged initially on the ADP report showing labor weakness, suggesting economic concerns may overshadow political gridlock. GNMA securities followed the broader MBS rally but remained more volatile than conventional mortgage securities. Mortgage originators are watching closely as the combination of weaker employment data and potential Fed rate cuts could create favorable conditions for refinancing activity. The current 10-year Treasury movement suggests mortgage rates may have room to decline if economic data continues to deteriorate. Market participants are particularly focused on Friday’s official jobs report for confirmation of labor market trends.

Bond traders remain cautiously optimistic about the near-term outlook, with MBS pricing still up significantly from yesterday’s levels despite the afternoon pullback. The interplay between economic data, Fed policy expectations, and political uncertainty will likely drive continued volatility in the mortgage securities market through the remainder of the week. **Subscribe to get this mortgage market intelligence delivered to your inbox daily, for free.