WTMS Blog Today = What’s up in Mortgage Today (PM) – 12/05/2025

Mortgage-backed securities posted modest losses today as inconsequential economic data failed to move markets significantly. The UMBS 5.0 coupon declined 5 basis points while the 10-year Treasury yield climbed 18 basis points to 4.117%. MBS traders showed little interest in today’s releases, with bonds trading well despite lackluster economic indicators.

Treasury curves experienced bear steepening this morning ahead of next week’s anticipated refunding supply. The 10-year yield’s rise brought rates closer to levels where money managers typically scale into positions. This technical movement reflects positioning ahead of the Federal Reserve’s December meeting rather than fundamental economic shifts.

Consumer sentiment data came in slightly above expectations at 53.3 versus the 52.0 forecast, though this barely registered with bond traders. Inflation expectations declined modestly with one-year expectations falling to 4.1% from 4.5% previously. The delayed Personal Consumption Expenditure report for September met consensus estimates across all measures.

Mortgage rates fell for the second consecutive week according to Freddie Mac’s survey, dropping to 6.19% from 6.23% the prior week. This represents the lowest level in nearly two months, providing some relief for originators facing sluggish demand. However, recent Treasury volatility suggests this downward trend may pause pending next week’s Fed decision.

Locking vs Floating

Bond markets are trading in a well-defined range with the 10-year yield holding between 4.00% and 4.15%. Random volatility is expected to continue until the Fed announcement next Wednesday. From a technical standpoint, rates are approaching long-term resistance levels that would require significant economic developments to break decisively lower.

MBS prices help manage intraday risk, but 10-year yield levels provide better insight into broader bond market momentum. Any sharp sell-off in bonds should attract buyers, especially if 10-year yields approach the 4.15% ceiling.

Today’s Events

Consumer Sentiment (Dec): 53.3 vs 52 forecast, 51.0 previous

Sentiment: 1y Inflation (Dec): 4.1% vs 4.5% previous

Sentiment: 5y Inflation (Dec): 3.2% vs 3.4% previous

U Mich conditions (Dec): 50.7 vs 51.3 forecast, 51.1 previous

Core PCE (m/m) (Sep): 0.2% vs 0.2% forecast, 0.2% previous

Core PCE Inflation (y/y) (Sep): 2.8% vs 2.9% forecast, 2.9% previous

Personal Income (Sep): 0.4% vs 0.3% forecast, 0.4% previous

Bond Pricing

UMBS 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.59 | -0.05 |
| 5.5 | 101.13 | -0.05 |
| 6.0 | 102.39 | -0.02 |

GNMA 30 yr
| Coupon | Price | Intra-Day Change |
| 5.0 | 99.74 | 0 |
| 5.5 | 100.9 | -0.02 |
| 6.0 | 101.84 | -0.04 |

Treasuries
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 3.542 | 99.92 | 0.019 |
| 3 yr | 3.564 | 99.82 | 0.02 |
| 5 yr | 3.69 | 99.708 | 0.015 |
| 7 yr | 3.883 | 99.194 | 0.014 |
| 10 yr | 4.115 | 99.067 | 0.015 |
| 30 yr | 4.776 | 97.603 | 0.018 |