WTMS Blog Today = What’s up in Mortgage Today (PM) – 11/05/2025

Two critical economic reports hit markets today, giving investors reasons to sell bonds. The ADP employment report showed 42,000 jobs added versus the 25,000 forecast, signaling more economic strength than expected. This seemingly modest beat was enough to pressure mortgage-backed securities, which rely on weaker economic data for support.

ISM Services delivered the bigger punch, rising to 52.4 and beating all economist estimates. The index marked its highest reading since February, with business activity jumping to 54.3 and new orders surging to 56.2. Most concerning for mortgage originators was the prices paid component spiking to 70.0, its highest level since October 2022.

The one-two combination of stronger employment and services data created immediate bond selling. UMBS 5.0 coupons dropped a quarter point while the 10-year Treasury yield climbed nearly 6 basis points to 4.144%. Volume spiked to daily highs as traders positioned for higher rates ahead.

The government shutdown continues to limit official economic data releases, making private reports like ADP and ISM more influential than usual. With the Bureau of Labor Statistics dark, markets are relying on these alternative data sources for economic signals. This concentration of market-moving information into a narrow window amplified today’s volatility.

Locking vs Floating

Today’s economic data created higher volatility risks due to the concentrated release schedule during the government shutdown. The combination of ADP and ISM Services proved capable of creating significant momentum, as evidenced by the bond selloff. MBS prices help with intraday risk management, but 10-year yield movements provide the bigger picture for bond market direction.

Today’s Events

– ADP Employment: 42k vs 25k forecast, -32k previous
– ISM Business Activity (Oct): 54.3 vs 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 | 99.4 | -0.18 |
| 5.5 | 100.97 | -0.1 |
| 6.0 | 102.25 | -0.02 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.59 | -0.21 |
| 5.5 | 100.76 | -0.1 |
| 6.0 | 101.77 | 0 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.616 | 99.778 | 0.038 |
| 3 yr | 3.629 | 99.637 | 0.046 |
| 5 yr | 3.744 | 99.462 | 0.046 |
| 7 yr | 3.931 | 99.663 | 0.056 |
| 10 yr | 4.137 | 100.917 | 0.054 |
| 30 yr | 4.717 | 100.532 | 0.052 |