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

Japanese political upheaval and Federal Reserve commentary sparked overnight bond market gains that carried into today’s trading session. Japan’s ruling coalition collapsed after another party exited, reducing fears about central bank Treasury selling that had pressured bonds earlier this week. Fed Governor Waller’s comments about weak employment and continued rate cuts provided additional fuel for the bond rally.

Mortgage-backed securities recovered all of yesterday’s losses with UMBS prices climbing 20-30 basis points by mid-morning. The 10-year Treasury yield dropped from yesterday’s close of 4.14% to around 4.10%, helping improve pricing across all coupon classes. Rate sheets today are expected to match Wednesday’s levels, which were the week’s best offerings.

Despite the impressive-sounding recovery, mortgage rates haven’t actually moved significantly in three weeks – just small daily fluctuations up and down. The ongoing government shutdown continues to limit economic data releases, creating a muted trading environment. Tariff headlines provided an additional boost around 11:26 AM, pushing the 10-year yield down to 4.06%.

Fed Governor Chris Waller finds himself increasingly concerned about labor market weakness, calling it “the punchline for policy.” He believes job growth has likely been negative for recent months and supports quarter-point rate cuts at each remaining meeting this year. Waller is among five remaining candidates to replace Jerome Powell when his Fed Chair term expires in May. Mortgage credit availability increased to its highest level in four months according to the MBA, driven primarily by expanded ARM loan offerings.

Banks are responding to the Fed’s rate cutting cycle by offering more adjustable-rate products, which remain about 80 basis points cheaper than fixed-rate loans. This trend reflects how bank funding costs respond more quickly to Fed policy changes than traditional mortgage pricing.

Locking vs Floating

Risk and reward around lock-float decisions remain subdued during the government shutdown period.

Risk-tolerant borrowers are waiting to see when delayed jobs reports will finally be released, as long as bonds don’t lose significant ground. Today’s rate sheets likely represent the week’s best pricing, but loans wanting to capitalize should be aware that bonds could drift through the session.

Today’s Events

No economic data scheduled due to government shutdown
10:00 AM: October Consumer Sentiment (preliminary)

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.47 | 0.3 |
| 5.5 | 100.98 | 0.24 |
| 6.0 | 102.21 | 0.08 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.51 | -0.01 |
| 5.5 | 100.82 | 0.1 |
| 6.0 | 101.73 | 0.03 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.529 | 99.945 | -0.067 |
| 3 yr | 3.539 | 99.536 | -0.071 |
| 5 yr | 3.657 | 99.855 | -0.077 |
| 7 yr | 3.84 | 100.213 | -0.081 |
| 10 yr | 4.062 | 101.533 | -0.078 |
| 30 yr | 4.647 | 101.666 | -0.076 |