WTMS Blog Today = What’s up in Mortgage Today (PM) – 11/06/2025

Bond markets delivered a much-needed rally this afternoon after challenging economic data painted a mixed picture. UMBS securities gained approximately 27 ticks on the 5.0 coupon, providing relief to mortgage originators who’ve endured weeks of selling pressure. The 10-year Treasury yield dropped 65 basis points to 4.096%, marking the most significant intraday improvement in recent memory.

ADP employment data exceeded expectations with 42,000 jobs added versus forecasts of 25,000. However, this strength was offset by concerning job cuts data from Challenger Gray & Christmas, which reported 153,000 layoffs in October—the highest monthly total in over two decades. The mixed employment signals created uncertainty that ultimately favored bond buyers.

ISM Services data showed continued expansion with the PMI rising to 52.4 from 50.8. New Orders jumped dramatically to 56.2 from 51.0, while Services Prices climbed to 70.0 from 69.4. These inflationary pressures should normally hurt bonds, but the overwhelming focus remained on employment weakness.

Federal Reserve speakers are scheduled throughout the trading session, including Williams, Barr, Hammack, and Waller. Their commentary on December rate cut prospects will be crucial given that trader expectations have increased to 60% from 50% following today’s job cuts report. The Bank of England held rates steady but signaled December easing, adding to global dovish sentiment.

Locking vs Floating

Today’s rally provides a temporary reprieve from the upward rate trend that began October 29th. While volatility remains elevated due to conflicting economic signals, even conservative clients might consider floating given the significant improvement in pricing. However, any rejection of this rally could quickly reverse gains, so monitor 10-year yield levels closely for confirmation of trend changes.

The prevailing bias toward higher rates since late October hasn’t been definitively broken despite today’s gains. Risk-tolerant clients may benefit from this pricing improvement, but those with near-term closings should weigh the potential for renewed selling pressure. MBS prices help with intraday risk management, but 10-year yield ceiling and floor levels remain critical for tracking longer-term bond market momentum.

Today’s Events

– ADP Employment: 42k vs 25k forecast, -32k previous
– ISM Business Activity: 54.3 vs 49.9 previous
– ISM Non-Manufacturing PMI: 52.4 vs 50.8 forecast, 50.0 previous
– ISM Services Employment: 48.2 vs 47.6 forecast, 47.2 previous
– ISM Services New Orders: 56.2 vs 51.0 forecast, 50.4 previous
– ISM Services Prices: 70.0 vs 68.0 forecast, 69.4 previous

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.59 | 0.31 |
| 5.5 | 101.08 | 0.16 |
| 6.0 | 102.27 | 0.06 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.76 | 0.25 |
| 5.5 | 100.87 | 0.12 |
| 6.0 | 101.76 | 0.07 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.574 | 99.858 | -0.06 |
| 3 yr | 3.585 | 99.761 | -0.063 |
| 5 yr | 3.696 | 99.677 | -0.069 |
| 7 yr | 3.882 | 99.958 | -0.069 |
| 10 yr | 4.096 | 101.252 | -0.065 |
| 30 yr | 4.691 | 100.94 | -0.049 |