The Fed is locked into the belief that the employment market has slowed. It has shifted its priority from inflation to employment declines. At the September FOMC meeting the Fed’s projections don’t see inflation hitting its obsolete 2.00% target until 2027. Tariffs the prime reason inflation will stay higher than the Fed wants.
MBA mortgage applications for last week. Applications in the US fell 1.8%. Applications to refinance a home loan decreased 1% and applications buy a home dropped 2.7%.
At 8:30 am ET the NY Empire State Manufacturing Index rose 19.4 points to 10.7 in October, marking its third positive reading in the last four months and beating market expectations of -1.0, signaling modest growth in business activity across New York State. New orders improved to 3.7 from -19.6 in September, while shipments rebounded to 14.4 from -17.3. Delivery times lengthened slightly (3.9 versus 0.0), and supply availability continued to worsen modestly (-10.7 versus -8.8). Inventories were largely unchanged (-1.0 versus -4.9). Employment increased to 6.2 from -1.2, though the average workweek edged slightly lower (-4.1 versus -5.1). Both input costs and selling prices rose at a faster pace. Firms grew more optimistic about the near-term outlook, with nearly half expecting conditions to improve in the coming months.
At 9:30 am the DJIA opened +180, NASDAQ +210, S&P 43. 10 year 4.02% -1 bp. FNMA 5.5 30 year coupon at 9:30 am -2 bps from yesterday’s close and +7 bps from 9:30 am yesterday.
At 2 pm the Fed Beige Book, the Fed’s details from the 12 Fed districts.
According to Treasury Secretary Bessent this morning on CNBC the administration will set price floors across a range of industries to combat market manipulation by China.
PRICES @ 10:00 AM
10 year note: 4.00% -3 bp
5 year note: 3.60% -1 bp
2 year note: 3.49% unch
30 year bond: 4.60% -3 bp
30 year FNMA 5.5: @9:30 am 101.07 -2 bp (+7 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 102.21 -5 bp (+1 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.89 -3 bp (+7 bp from 9:30 am yesterday)
Dollar/Yen: 151.53 -0.30 yen
Dollar/Euro: $1,1627 +$0.0018
Dollar Index: 98.87 -0.18
Gold: $4,209.50 +$46.10 (another new record)
Bitcoin: 111,410 -1271
Crude Oil: $59.01 +$0.31
DJIA: 46,604 +333
NASDAQ: 22,744 +222
S&P 500: 6704 +59
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.
Neutral
Fall: The new golden season for homebuyers
They say timing is everything, and included in that adage is real estate. According to Teresa Mettela's reporting for Realtor.com, the sweet spot for homebuyers in 2025 officially arrived on October 12th, “With it comes more listings, lower prices, and significantly less competition than we've seen in years,” she says.
Experts confirm what the data shows: the market is shifting. After rates eased recently, brokers have been fielding more calls from buyers and agents, according to Mettela. “Even in tight markets like Miami, where inventory remains limited, there's a noticeable seasonal bump in activity. Families want to settle in before the holidays and start fresh in January, creating natural momentum this time of year.”
The numbers? They tell an encouraging story after a sluggish spring and summer. Inventory climbed past one million listings nationally by late spring, and while they are still slightly below pre-pandemic levels, the gap has narrowed considerably. Realtor.com projects that the third week in October could offer as much as a third more active listings than the start of the year. For buyers, it seems likely to translate into the real deal, saving them more than $15,000 compared to summer peak prices on a median-priced home of $439,000.
Timing, however, varies by location. Of the 50 largest metros, 13 hit their prime earlier in the year, while 16 will peak later. New York City and Philadelphia saw optimal conditions in early to mid-September, while Miami and Tampa won't hit their stride until early December. Major markets like Houston, Los Angeles, and Washington align closely with the national October window.
Danielle Hale, chief economist at Realtor.com, notes that buyers are finally responding to lower mortgage rates, with purchase applications climbing in recent weeks. Newly listed homes ticked up for the first time in several weeks, though seller momentum has waned compared to earlier in the year. The market is shifting buyer-friendly, making it the most balanced housing market seen in years. Time on market has defaulted back to pre-pandemic norms, and seller expectations are adjusting as well. Some metros, like Austin, even tilted buyer-friendly over the summer. Buyers can negotiate again, take their time, and weigh options. It’s no longer an offer shootout.
Affordability is still stuck, however, as economic uncertainty continues to dampen demand. For those financially ready to strike, however, this fall presents a meaningful opportunity. The key is understanding your local market and moving confidently when the right home appears.
Realtor, TWBS
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are under a little pressure today. The MBS market improved by +14 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Neutral
These are the three things that have the greatest ability to impact rates this week. 1) The Federal Reserve, 2) Geopolitical and 3) Government Shutdown Delays.
1) The Federal Reserve:
We have a big week for the Fed. We will get their Beige Book on Wednesday and hear from Fed Chair Powell on Tuesday. There will be other Fed speakers every day this week.
2) Geopolitical:
The peace deal in the Middle east is removing uncertainty from bond markets while the continued Government shutdown is adding uncertainty.
3) Government Shutdown Delays:
Several very important data points continue to be delayed by the shutdown. Bond markets will be keenly interested in Retail Sales, the Producer Price Index and Initial Jobless Claims if the government reopens.
This Week's Potential Volatility: High
This morning markets have started under a little pressure. Volatility has started at moderate to low levels but with so much in the air it could escalate any time this week.
Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
The bond market was closed Monday. The stock indexes had a strong session on optimism the US and China were progressing, that faded over night, this morning stock indexes began lower. US–China trade relations faded as both countries began imposing new port fees on each other’s shipments, stoking concerns of further escalation.
The key today, Jerome Powell speaking at the National Association for Business Economics (NABE) at 12:20 pm ET. Early this morning the September. The National Federation of Independent Business Optimism index expected at 100.5 from 100.8 in August but declined to 98.8. Not a top tier report but does go to the view that small businesses have concerns.
It appears that the shut down will last much longer than originally thought, both parties locked in immoveable positions. Tomorrow military and other federal employees will miss a paycheck. Thursday September PPI index will be reported but the more interesting CPI will not be released until October 24th, four days prior to the beginning of the FOMC meeting. The weekly jobless claims scheduled Thursday will not be released for the third week. The September employment report will be on hold.
The IMF and World Bank Group meeting began yesterday and continues through Thursday. Powell today, markets want to hear how he frames the lack of incoming data going into the FOMC meeting in two weeks. The markets remain optimistic for a rate cut of 25 bps from the Fed.
This morning the bellwether 10 year note hit the lowest level since September 17th at 4.00% before climbing back to Friday’s close. MBS prices began lower this morning but found support at 9 am, at 9:30 am +4 bps from Friday.
At 9:30 am the DJIA opened -372 after increasing 135 yesterday, NASDAQ -331, S&P -67. 10 year a 9:30 am 4.05% -1 bp from Friday. FNMA 5.5 30 year coupon at 9:30 am +4 bps from Friday’s close and +5 bps from 9:30 am Friday.
Powell at 12:20 pm ET will direct movement in rates this afternoon, speaking on the economic outlook and monetary policy. He doesn’t have current data so his remarks will carry some uncertainty. The Fed is ”sure” employment is slowing, the most recent data from ADP showing September jobs declined.
10 year note: 4.04% unch from Friday
5 year note: 3.63% unch
2 year note: 3.50% -1 bp
30 year bond: 4.64% +1 bp
30 year FNMA 5.5: @9:30 am 101.00 +4 bp (+5 bp from 9:30 am Friday)
30 year FNMA 6.0: @9:30 am 102.20 -1 bp (+1 bp from 9:30 am Friday)
30 year GNMA 5.5: @9:30 am 100.82 -1 bp (+1 bp from 9:30 am Friday)
Dollar/Yen: 151.87 -0.42 yen
Dollar/Euro: $1.1580 -$0.0010
Dollar Index: 99.23 -0.03
Gold: $4,144.50 +$11.50
Bitcoin: 111,093 -4825
Crude Oil: $58.33 -$1.16
DJIA: 45,717 -350
NASDAQ: 22,346 -349
S&P 500: 6589 -66
Early this morning the 10 year note yield was down 3 basis points from yesterday after increasing 2 basis points yesterday. Markets are waiting for Congress to re-open the government.
Fed Governor Waller spoke this morning. He supports more rate cuts but cautions that the Fed needs to be cautious due to what he said is conflicting economic signals. “I’m still in the belief we need to cut rates, but we need to kind of be cautious about it,” Waller said during an interview on CNBC’s “Squawk Box.” The labor market seems to be losing jobs, but GDP growth is strong. And inflation isn’t slowing. Waller is one of the candidates to be the next Fed chief.
Weekly jobless claims were not reported yesterday from the Labor Department due to the shut down but Goldman Sachs did its own calculation. According to Goldman Sachs economists, weekly claims for the week ending on October 4th increased to about 235 thousand from 224 thousand the week prior. The week before that claims were 218 thousand. Continuing claims, a proxy for the number of people receiving benefits, ticked up to 1.92 million in the week ended September 27th from the prior week’s estimated 1.91 million. If the assessment is correct, it verifies the labor market is slowing.
At 10 am the October mid-month University of Michigan consumer sentiment index, expected at 54.0 from 55.1 at the end of September. The index was reported at 55.0.
This afternoon at 2 pm the Treasury is scheduled to report the September budget balance and fiscal 2025 deficit. It is unknown if it will actually be reported due to the shut down.
10 year note: 4.10% -4 bp
5 year note: 3.70% -3 bp
2 year note: 3.58% -2 bp
30 year bond: 4.68% -4 bp
30 year FNMA 5.5: @9:30 am 100.95 +10 bp (+9 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 102.19 +2 bp (+1 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.81 +8 bp (-1 bp from 9:30 am yesterday)
Dollar/Yen: 152.63 -0.45 yen
Dollar/Euro: $1.1566 unch
Dollar Index: 99.34 -0.20
Gold: $4,011.10 +$38.50
Bitcoin: 123,317 +1292
Crude Oil: $60.34 -$1.17
DJIA: 46,475 +121
NASDAQ: 23,067 +43
S&P 500: 6748 +13
The shut down marches on for the ninth day. Markets began unchanged this morning after not much change all week.
The minutes for the Fed’s September meeting was released yesterday afternoon. It pointed to a central bank still concerned about elevated inflation but willing to cut its rates after a softening labor market shifted the balance of risks. The FOMC meets again on October 28th and 29th, markets still looking for another rate cut but less sure without labor data.
The ECB met today holding rates steady after months of cutting. Several members viewed inflation risks as tilted to the downside and a few saw them as tilted to the upside. Between June 2024 and June 2025, the ECB cut borrowing costs by 200 bps.
At 9:30 am the DJIA opened +53, NASDAQ +4, S&P +8. 10 year 4.14% +2 bps. FNMA 5.5 30 year coupon at 9:30 am -3 bps from yesterday’s close and -13 bps from 9:30 am yesterday.
At 1 pm Treasury will auction $22B of 30 year bonds, yesterday’s 10 year auction was soft.
The federal budget deficit was $1.8 trillion in fiscal year 2025, the Congressional Budget Office estimates, $8B less than the shortfall recorded during fiscal year 2024. Revenues increased by an estimated $308B (or 6 percent); increases in collections of individual income taxes and customs duties were partially offset by a decline in corporate tax receipts. Outlays rose by an estimated $301B (or 4 percent). Outlays were higher in several areas, including the largest benefit programs and net interest on the public debt (which, for the first time, surpassed $1 trillion). Decreases in outlays recorded for federal student loan programs, deposit insurance, and by the Small Business Administration partly offset those increases.
10 year note: 4.14% +2 bp
5 year note: 3.74% +1 bp
2 year note: 3.60% +1 bp
30 year bond: 4.73% +2 bp
30 year FNMA 5.5: @9:30 am 100 ,86 -3 bp (-13 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 102.18 -2 bp (-2 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.82 +3 bp (+4 bp from 9:30 am yesterday)
Dollar/Yen: 152.86 +0.16 yen
Dollar/Euro: $1.1602 -$0.0029
Dollar Index: 99.12 +0.20
Gold: $4,045.70 -$24.80
Bitcoin: 123,041 -452
Crude Oil: $62.54 unch
DJIA: 46,439 -162
NASDAQ: 23,008 -35
S&P 500: 6739 -15
Bond markets remain in very tight ranges with the shut down not hurting or helping, the 10 year note since September 19th has been locked between 4.08% and 4.20%, early this morning at 4.10%.
Once again today, there aren't any economic releases, although MBA did report last week’s mortgage applications. Applications declined 4.7% in the week ending October 3rd, extending the 12.7% drop recorded in the previous period. Refi’s fell by 8%, while applications for home purchases eased by 1%. More buyers are turning to adjustable-rate mortgages (ARMs). These accounted for 9.5% of total applications last week, up from 8.4% a week earlier.
There is no news on the government shut down.
Yesterday August consumer credit was reported. The use of credit cards (revolving credit) fell in August for the third time this year. The decline was offset by a small rise in nonrevolving credit such as car loans and student loans. Overall consumer credit outstanding in August was basically flat, forecasts were for an increase of $13.5B. The job market slowing, inflation still high at 3.1%, the Fed facing a rate cut that will be a change in the Fed’s approach to how it handles short term rates.
At 9:30 am the DJIA opened +121, NASDAQ +64, S&P +13. 10 year note 4.11% -2 bps. FNMA 5.5 30 year coupon at 9:30 am +5 bps from yesterday’s close and +8 bps from 9:30 am yesterday.
At 1 pm Treasury is set to auction $39B of 10 year notes, yesterday’s 3 year auction was met with strong demand. The 10 a different animal, demand will be closely watched.
At 2 pm the minutes from the September FOMC meeting will be released, in a sense its old news with the government closure but the minutes does get attention.
MBS prices have been inching higher the past day or two, but there won't be much directional movement until the government is back to normal. Tomorrow Jerome Powell is scheduled to talk briefly providing opening remarks at the Community Bank Conference, Washington, according to the Fed calendar it will be a pre-recorded speech.
10 year note: 4.12% -1 bp
5 year note: 3.71% unch
2 Year note: 3.58% unch
30 year bond: 4.72% -1 bp
30 year FNMA 5.5: @9:30 am 100.99 +5 bp (+8 bps from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 102.20 unch (+5 bps from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.78 +2 bp (+3 bps from 9:30 am yesterday)
Dollar/Yen: 152.59 +0.69 yen
Dollar/Euro: $1.1631 -$0.0028
Dollar Index: 98/74 +0.17
Gold: $4,051.00 +$46.10
Bitcoin: 122,237 +574
Crude Oil: $62.36 +$0.64
DJIA: 46,595 -7
NASDAQ: 22,927 +139
S&P 500: 6737 +22
Markets began generally unchanged from yesterday.
There a few Fed officials scheduled to speak today.
At 9:30 am the DJIA opened +93, NASDAQ +23, S&P +9. 10 year note 4.15% unchanged from yesterday. FNMA 5.5 30 year coupon at 9:30 am +5 bps, from 9:30 am yesterday +6 bps.
At 1 pm Treasury is scheduled to auction $58B of 3 year notes. At 3 pm August consumer credit expected at +$13.5B, down from +$16.0B in July.
US financial markets marking time, unable to make judgments as long as the government is shut and the data flow has ceased. This morning the August US trade deficit wasn’t released.
10 year note: 4.16% +1 bp
5 year note: 3.74% unch
2 year note: 3.60% unch
30 year bond: 4.75% unch
30 year FNMA 5.5: @9:30 am 100.91 +5 bp (+6 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 102.15 -1 bp (+3 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.75 +5 bp (+3 bp from 9:30 am yesterday)
Dollar/Yen: 150.84 +0.49 yen
Dollar/Euro: $1.1669 -$0.0045
Dollar Index: $1.1667 -$0.0042
Gold: $3,997.10 +$20.80
Bitcoin: 123,874 -1608
Crude Oil: $61.56 -$0.13
DJIA: 46,711 +16
NASDAQ: 22,974 +34
S&P 500: 6746 +5
The housing market’s great divide
Whether they want them or not, today’s homebuyers are finally getting some answers. They just may not be the ones they might have expected. After years of being told they “can’t handle the truth” of sky-high prices and vanishing inventory, the tables have taken what might be referred to as a half-turn. Call it a more nuanced reality. And it’s one that varies dramatically depending on a number of factors.
For the 23rd consecutive month, active listings have climbed, rising 17% compared to last year. Good news? For many buyers it is. But before anyone breaks out the bubbly, consider that we are still nearly 14% below where we were before the pandemic. What’s more, that steady growth we celebrated all summer has begun to dwindle as fall arrives.
To get a handle on this, we must zoom in on different corners of the country. The South and West have bounced back above their pre-pandemic inventory levels and continue adding supply. Cities like Denver and Austin are taking names, with housing stock well above their historical norms from 2017 to 2019. But the Northeast and Midwest aren’t so lucky, remaining deeply undersupplied. Metros like Hartford and Chicago are trailing furthest behind their pre-pandemic baselines. It’s as if two entirely different housing markets exist within the same country.
In much of the U.S., homes are just sitting there. The typical property now sits on the market for 62 days—a full week longer than this time last year. Florida and Las Vegas lead the slowdown, with listings in these once-hot markets spending the most time waiting for that one buyer to walk through the door.
Pricing-wise the national median list price held steady at $475,000. However, that stability masks significant regional movement. The West saw prices dip 3.6%, while the Northeast and Midwest are experiencing per-square-foot price increases, and the South and West are seeing declines. Another split along geographic lines.
A big tell is what’s happening with price cuts. Nearly 1 in 5 listings saw reductions in September, with sellers in the $350,000 to $500,000 range most likely to lower their asking prices. Think about it. These aren’t luxury sellers testing the waters; they’re homeowners who need to move and are willing to negotiate. Luxury home sellers, by contrast, are remaining patient, with price reductions least common at the top end. They wait because they can.
Falling mortgage rates? Easy to forget about that element as the market’s pace continues to decelerate. The good news, however, is that we now have a housing landscape offering buyers more negotiating power than they’ve enjoyed in years. It just depends on your zip code.
Realtor, TBWS
Mortgage rates are moving sideways today. The MBS market improved by +18 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.
These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) The Fed and 3) Treasury Auction.
Geopolitics update:
Markets now expect the Government shutdown to continue through the rest of the week. In the absence of economic reports usually provided by the Government, markets will be focused on private research reports, Federal Reserve speakers and Treasury Auctions.
Federal Reserve Update:
The Fed shows increasing divide on how to proceed forward. There will be Fed speakers every day this week.
Treasury Update:
The US Treasury will have auctions on Tuesday, Wednesday and Thursday with extra attention being paid to the Thursday auction.
This morning markets started under a little pressure but are now back to sideways levels. Volatility has started at moderate levels but could become high at any time depending on geopolitical news.
No positive news about the government shut down over the weekend, now in its sixth day, which has delayed the release of key economic data last week. Last week’s employment report and weekly jobless claims were not released, but ADP did report its September private jobs declined. The 10 year at its highest in over a week, driven in part by rising borrowing costs in Europe and Japan amid political developments.
The calendar this week is thin on key data, weekly jobless claims on Thursday if the government gets back to work. In the meantime, the minutes from the last FOMC meeting is scheduled to be released on Wednesday. On Thursday Jerome Powell will deliver opening remarks at the Community Bank Conference in Washington, it won’t be live, but a prerecorded video. The week has many Fed speakers on the calendar. There is increasing conversation among Fed officials about whether the current guidelines for when or if to change the FF rate.
At 9:30 am ET the DJIA opened +79, NASDAQ +99, S&P +21. 10 year note 4.16 +4 bps. FNMA 5.5 30 year coupon at 9:30 am -11 bps from Friday’s close and -20 bps from 9:30 am Friday.
There are no economic releases today, and hardly any through the week. The week’s focus will be on the progress of the government shut down, the FOMC minutes on Wednesday and Treasury auctions Tuesday, Wednesday, and Thursday. Fed speakers every day.
10 year note: 4.15% +3 bp
5 year note: 3.74% +2 bp
2 year note: 3.60% +3 bp
30 year bond: 4.74% +3 bp
30 year FNMA 5.5: @9:30 am 100.85 -11 bp (-20 bp from 9:30 am Friday)
30 year FNMA 6.0: @9:30 am 102.12 -7 bp (-14 bp from 9:30 am Friday)
30 year GNMA 5.5: @9:30 am 100.72 -8 bp (-13 bp from 9:30 am Friday)
Dollar/Yen: 149.90 +2.45 yen
Dollar/Euro: $1.1698 -$0.0096
Dollar Index: 98.24 +0.52
Gold: $3,963.80 +$54.90
Bitcoin: 124,575 +1945
Crude Oil: $61.31 +$0.43
DJIA: 46,563 -196
NASDAQ: 22,862 +82
S&P 500: 6724 +9
Three days of partial closure with not much change in markets. Consensus remains the shut down will likely end early next week, if not then we can expect some big reactions in US and global markets.
At 9:30 am ET the DJIA opened +98, NASDAQ +38, S&P +10. 10 year note 4.10% +1 bp. FNMA 5.5 30 year coupon at 9:30 am -3 bps from yesterday’s close and +9 bps from 9:30 am yesterday.
At 9:45 am September PMI final services sector index thought to be at 53.9 increased to 54.2.
At 10 am September ISM services sector index expected at 51.6 reported at 50.0 and down from 52.0 in August.
Should be another quiet session unless unexpected news hits.
10 year note: 4.10% +2 bp
5 year note: 3.69% +3 bp
2 year note: 3.56% +2 bp
30 year bond: 4.70% +1 bp
30 year FNMA 5.5: @9:30 am 101.05 -3 bp (+9 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 102.26 unch (+7 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 100.85 -1 bp (+8 bp from 9:30 am yesterday)
Dollar/Yen: 147.31 +0.05 yen
Dollar/Euro: $1.1739 +$0.0021
Dollar Index: 97.71 -0.14
Gold: $3,911.70 +$43.60
Bitcoin: 120,579 -358
Crude Oil: $60.80 +$0.32
DJIA: 46,750 +230
NASDAQ: 22,850 +6
S&P 500: 6726 +11