Bond markets were volatile yesterday.
This morning Fed chief Warsh saying the global shift toward tighter monetary policy as a common fight on prices; “a synchronous tightening in monetary policy in most places around the world,” which means “there’s no free riders.” Global public debt is on pace to exceed 100% of the world’s GDP, a level last breached in the aftermath of World War II.
Traders see a 72.3% chance for the Fed to keep rates unchanged at the October 27-28th meeting, according to CME FedWatch, while the majority expect a 25 basis point hike at the December meeting.
September import and export prices this morning better than anticipated. Month/month imports expected +0.6% increased 1.1%, year/year +8.1% from 6.7% in August. Exports month/month expected +0.9% increased 2.2%, year/year +11.9% from 9.3% in August.
Industrial production rose 0.7% month/month in September, the most in five months and more than market expectations of 0.4%. Capacity utilization also improved, reaching 76.9% in September. Despite the monthly increase, the rate remained 2.5 percentage points below its long-term average for 1972–2025.
2026 federal deficit $1.965 trillion, total debt $40.18 trillion.
PRICES @ 10:00 AM
10 year note: 5.09% +1 bp
5 year note: 4.89% -1 bp
2 year note: 4.73% -1 bp
30 year bond: 5.42% +1 bp
30 year FNMA 6.5: @9:30 am 101.13 -12 bp (-26 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 98.79 -19 bp (-38 bp from 9:30 am yesterday)
30 year GNMA 6.5: @9:30 an 100.86 +8 bp (-13 bp from 9:30 am yesterday)
Dollar/Yen: 157.87 -0.12 yen
Dollar/Euro: $1.1256 +$0.0034
Dollar Index: 101.70 -0.36
Gold: $4,196 +$26.00
Bitcoin: 81,756 -544
Crude Oil: $98.12 +$0.17
DJIA: 52,487 +309
NASDAQ: 26,527 -186
S&P 500: 7740 -4
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.
At 8:30 am ET September PPI (producer prices) were substantially higher than estimates, weekly jobless claims remained strong.
PPI month/month expected at +0.5% increased 1.3%, year/year thought to be +5.4%, increased 6.3%; the core, excluding food and energy, forecasted 0.3% month/month, increased 0.6%, its largest gain in five months, compared to 0.4% in August, year/year estimates 4.5%, increased 5.0%.
Weekly claims at 199K, +1K from the week before.
September retail sales month/month +0.8% with estimates at 0.3%, down from 1.3% in August, ex-vehicle sales +0.9% against forecasts of +0.5%.
Yesterday investors, with treasury yields high, and the stock market (NASDAQ) over-valued, made a mad rush to safer grounds. Tuesday the 10 year ended at 5.22%, the 10 year note yesterday on initial reaction to CPI inflation jumped to 5.33% before reversing. From yesterday’s high at 5.33% at 10 am, this morning at 5.06%.
10 year note: 5.05% -14 bp
5 year note: 4.84% -14 bp
2 year note: 4.69% -11 bp
30 year bond: 5.40% -13 bp
30 year FNMA 6.5: @9:30 am 101.39 +52 bp (+109 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 99.17 +63 bp (+130 bp from 9:30 am yesterday)
30 year GNMA 6.5: @9:30 am 101.23 +37 bp (+87 bp from 9:30 am yesterday)
Dollar/Yen: 157.64 -.69 yen
Dollar/Euro: $1.1216 +$0.0056
Dollar Index: 102.07 -0.48
Gold: $4,178 +$70.00
Bitcoin: 79,789 -1923
Crude Oil: $95.93 +$0.84
DJIA: 51,749 +127
NASDAQ: 26,379 -314
S&P 500: 7680 -38
September consumer price index (CPI) was mostly in line with estimates, the deviation was in year/year core CPI that was thought to be 2.5% up from 2.4% in August, it increased 2.6%. Year/year overall CPI expected +3.7% up from 3.4% the last two months. Consumer prices rose sharply for shelter (0.4% versus 0.3% in August) and transportation services (0.6% versus 0.5%). Meanwhile, the CPI rebounded for medical care services (0.3% versus -0.2%). From the previous year, the core inflation rate was at 2.6%. Gasoline rose 34.2% year/year, more than 27.4% in August and fuel oil prices increased 74.2%, compared with 52% previously.
The reaction was swift, the 10 year yield increased 8 bps, MBS prices dropped 62 bps. No improvement in inflation resurrects the idea the Fed will increase rates, probably not at the October 29th FOMC meeting but the December FOMC is likely with inflation remaining elevated.
Weekly MBA mortgage applications this morning, down 2.7% last week. Applications to refinance a loan fell by 0.45% from the previous week, while purchase applications declined by 0.40%.
At 2 pm, the Fed’s Beige Book, details from the 12 Fed districts.
This week kicks off earnings week led by banks. Some banks that have reported were better while others are not meeting expectations.
Tomorrow September producer price index, year/year core PPI expected at 4.5% from 4.6%.
10 year note: 5.30% +8 bp
5 year note: 5.10% +10 bp
2 year note: 4.91% +11 bp
30 year bond: 5.61% +5 bp
30 year FNMA 6.5: @9:30 am 100.30 -55 bp (-48 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 97.87 -62 bp (-69 bp from 9:30 am yesterday)
30 year GNMA 6.5: @9:30 am 100.35 -47 bp (-39 bp from 9:30 am yesterday)
Dollar/Yen: 158.91 +0.60 yen
Dollar/Euro: $1.1125 -$0.0073
Dollar Index: 102.77 +0.59
Gold: $4,120 -$56
Bitcoin: 82,962 -247
Crude Oil: $95.31 +$1.17
DJIA: 51,710 +40
NASDAQ: 26,994 -211
S&P 500: 7761 -45
Neutral
‘Show me the money!’
When actor Cuba Gooding Jr. yelled that line in the movie Jerry Maguire, no one knew first-time homebuyers would have their own version of it in 2026. In this case, the line is, “show me the price cut.”
Realtor.com's Anna D'Amico looks at a new Neighbors Bank survey of people shopping for a first home, or who bought one in the past year, and finds buyers who are feeling sharper and more confident. They're also waiting on sellers to meet them partway.
When asked which seller concession would most boost their confidence, 40% of respondents named a price reduction. Prices are inching that way. The national median list price in September was $419,250, according to Realtor.com data, down 1.4% from a year earlier and the 11th straight month of annual declines. Buyers want more than slow progress, though, and they're willing to ask. Some 86% feel comfortable offering below asking price, and 57% have walked away from a home because they felt they had the leverage to do it.
A lower price isn't the only way to save, however. Up to 83% of buyers would accept a mortgage rate buydown from a seller or builder. Many also expect sellers to handle repairs before closing and to help with closing costs, which cuts the cash a buyer needs upfront.
Rates are still the biggest obstacle. About 70% of respondents say current rates make every option feel out of reach. Neighbors Bank points out that the rate in the headlines isn't the one a buyer actually gets. Credit history, loan type, down payment, and seller concessions all affect it. Waiting for rates to fall carries a risk too, since prices can climb in the meantime, or a flood of buyers can show up the moment rates drop. More than a quarter of first-time buyers say that's their biggest worry.
Broker Bob Curtis, tells Realtor.com that trying to time the market rarely works. "Don't buy a home because you think rates are about to go up, and don't postpone buying solely because you think rates are about to come down," he says. "Buy when you find the right home and can comfortably afford the total cost of owning it."
To get there, buyers are widening the search. Nearly 90% are open to buying outside a major metro, and many are looking at different neighborhoods and smaller homes. St. Louis-based realtor and investor Ben Mizes sees the shift among his clients. "Rather than spending their budgets on the best house and backyard, they are looking farther away at smaller houses. They are doing more research on houses that can be improved with minor changes," he says.
He goes on to say that many people are deciding that they can live with a house that doesn't have all of the ideal features rather than saving to buy a house for another 10 years. Once they find a place, Mizes says, asking the seller for concessions is working for many of them.
Confidence does have its limits. About 69% of respondents say every homebuying decision feels too risky to get wrong. Even so, they're negotiating, compromising, and walking away when the numbers don't work, which is about as smart as a first-time buyer can be in this market.
So yes. Show them the money.
Realtor, TBWS
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 pressure today. The MBS market improved by +6 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) Inflation, 2) The Fed and 3) Oil.
1) Inflation: We will get both CPI and PPI this week with the focus on CPI which is expected to see the headline rise from 0.4% to 0.6% on a MOM basis. The hotter this reading is, the worse it will be for rates (and vice versa).
2) The Fed: We will get the Fed's Beige Book on Wednesday which is prepared 2 weeks before the next FOMC meeting. And Friday begins the Fed's media blackout period so all Fed speeches this week will get a lot of attention.
3) Oil: Generally oil prices moderated and fell last week which kept MBS moving sideways. MBS are less sensitive to oil prices now compared to a month ago but its still a factor. Its just that $1 moves are not usually as impactful as they once were but $2 to $3 moves are still impactful.
This Week's Potential Volatility: High
This morning markets have been under steady pressure. Volatility has started at moderate levels and could go higher later 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.
Bond market closed yesterday, stocks traded, DJIA +196. Crude oil +$2.31.
This morning a strong start in bonds, the 10 year note began at 5.19% -6 bps, MBSs +23 bps from Friday. Last Wednesday the 10 ended at 5.28% after increasing to 5.33% a new high, Thursday the note dropped again to 5.23%, Friday unchanged. The 10 year note down 13 bps from its high.
Tomorrow September CPI inflation and Thursday September PPI inflation should keep rates from moving much today. Current estimates for CPI, month/month overall +0.6% from +0.4%, year/year +3.6% from +3.4%; core month/month +0.2% from +0.3%, year/year core +2.5% from +2.4%. Thursday’s September PPI month/month overall +0.5% from +0.4%, year/year +5.4% unch from August; core month/month +0.3% from +0.2%, year/year core +4.5% from +4.6%.
Early this morning the NFIB small business optimism index excepted at 98.0 from 98.7, fell to 97.9.
At 10 am September exiting home sales forecasts 3.965 million from 3.980 million in August, reported at 3.990 million, month/month +1.5%, year/year -2.2%.
So far this morning increased volatility in equities and bonds.
10 year note: 5.23% -1 bp
5 year note: 5.02% unch
2 year note: 4.83% +3 bp
30 year bond: 5.57% -3 bp
30 year FNMA 6.5: @9:30 am 100.78 +14 bp (+29 bp from 9:30 am Friday)
30 year FNMA 6.0: @9:30 am 98.18 -6 bp (+15 bp from 9:30 am Friday)
30 year GNMA 6.5: @9:30 am 100.74 +20 bp (+16 bp from 9:30 am Friday)
Dollar/Yen: 158.36 -0.27 yen
Dollar/Euro: $1.1195 +$0.0038
Dollar Index: 102.20 -0.39
Gold: $4,206.50 +$15.90
Bitcoin: 83,213 +452
Crude Oil: $92.94 -$0.80
DJIA: 51,924 +74
NASDAQ: 27,250 +4
S&P 500: 7806 -2
For over a month Treasury borrowing had met with meager demand. The 10 year note auction on Wednesday and yesterday’s 30 year bond auction both saw strong demand possibly suggesting investors are content at current levels even with the Fed likely to increase the FF rate at the December FOMC meeting.
The only economic news on the calendar today, mid-month University of Michigan consumer sentiment index. Consumer sentiment and the Conference Board’s consumer confidence index have been slipping the last couple of months. Consumers concerned with inflation although employment is holding well.
Next week on Wednesday and Thursday markets will get September CPI and PPI.
10 year note: 4.18% -1 bp
5 year note: 3.72% -2 bp
2 year note: 3.47% -1 bp
30 year bond: 4.87% unch
30 year FNMA 5.0: @9:30 am 99.69% +5 bp (-10 bp from 9:30 am Friday)
30 year FNMA 5.5: @9:30 am 101.43 +5 bp (-6 bp from 9:30 am Friday)
30 year GNMA 5.0: @9:30 am 99.73 +5 bp (-8 bp from 9:30 am Friday)
Dollar/Yen: 156.76 -0.07 yen
Dollar/Euro: $1.1683 -$0.0038
Dollar Index: 98.69 +0.27
Gold: $4,434.70 +$105.40 (safety move)
Bitcoin: 93,265 +1994
Crude Oil: $58.05 +$0.73
DJIA: 48,922 +553
NASDAQ: 23,401 +166
S&P 500: 6898 +40
Bond markets saw volatility yesterday, the 10 hit a high of 5.37% then rolled down to close at 5.29%, MBS price in the morning -32 bps ending +3 bps. This morning no follow-through, the note began at yesterday morning’s high 5.37%, MBSs at 9 am ET -23 bps.
Crude oil this morning up about 5.0%, +$4.25/barrel.
Another impediment for the bond market this morning, Fed Governor Christopher Waller said more increases in the FF rate are needed but did say; “The hikes do not need to come at consecutive meetings.” Yesterday the FOMC minutes were about the same.
Weekly jobless claims continue to hold very low levels, claims at 197K against 200K forecasts and remain at 60 year lows. Continuing claims, a gauge of ongoing unemployment, rose by 17,000 to 1,716,000, remaining relatively close to the more-than-three-year low touched the week before.
This afternoon at 1 pm Treasury will sell $22B of 30 year bonds, the 10 year auction yesterday was met with very strong demand on all metrics.
10 year note: 5.28% -1 bp
5 year note: 5.05% +2 bp
2 year note: 4.80% +3 bp
30 year bond: 5.65% -2 bp
30 year FNMA 6.5: at 9:30 am 100.27 -9 bp (-1 bp from 9:30 am yesterday)
30 year FNMA 6.0: at 9:30 am 97.72 -10 bp (+12 bp from 9:30 am yesterday)
30 year GNMA 6.5: at 9:30 am 100.39 -11 bp (+13 bp from 9:30 am yesterday)
Dollar/Yen: 158.18 +0.10 yen
Dollar/Euro: $1.1201 unch
Dollar Index: 102.30 +0.06
Gold: $4,148.70 -+$8.00
Bitcoin: 82,038 -1347
Crude Oil: $92.19 +$3.94
DJIA: 51,156 -24
NASDAQ: 27,381 -158
S&P 500: 7782 -19
The 10 year note began the day at 5.35%, +7 bps after dipping 3 bps yesterday crude oil at 9 am ET +$0.40.
Weekly MBA mortgage applications continue to decline, -4.2% from the previous week. Applications to refinance a loan fell by 7.5% from the previous week, while purchase applications declined by 2.1%.
News continues to headline oil prices, but that isn’t all of it. Crude oil prices are high but the reality is oil prices are well down from their highs a month ago. The Fed will increase the FF rate this year, likely in December; Warsh wants inflation down from current 3.4% to 2.0%, a very high mountain to climb.
At 1 pm Treasury will sell $39B of 10s, demand will get attention.
At 2 pm FOMC minutes.
At 3 pm August consumer credit.
10 year note: 5.33% +4 bp (down from 5.36% at 9 am)
5 year note: 5.06% +3 bp
2 year note: 4.80% unch
30 year bond: 5.71% +5 bp
30 year FNMA 6.5: @9:30 am 100.26 -32 bp (-25 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 97.60 -45 bp (-35 bp from 9:30 am yesterday)
30 year GNMA 6.5: @9:30 am 100.20 -50 bp (-21 bp from 9:30 am yesterday)
Dollar/Yen: 158.29 +0.18 yen
Dollar/Euro: $1.1178 -$0.0083
Dollar Index: 102.41 +0.57
Gold: $4,109.20 +$77.90
Bitcoin: 83,061 -2556
Crude Oil: $90.90 +$1.46
DJIA: 51,510 -506
NASDAQ: 27,414 -186
S&P 500: 7776 -43
Bond markets began better this morning driven by declining oil prices.
There isn’t any data today, Treasury will sell $58B of 3 year notes at 1 pm ET.
Tomorrow the Fed will release the minutes from the last FOMC meeting, most of what the minutes will show is already in markets.
10 year note: 5.30% -1 bp
5 year note: 5.05% -1 bp
2 year note: 4.82% unch
30 year bond: 5.66% unch
30 year FNMA 6.5: @9:30 am 100.51 +14 bp (+6 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 97.95 +15 bp (+6 bp from 9:30 am yesterday)
30 year GNMA 6.5: @9:30 am 100.47 +14 bp (+15 bp from 9:30 am yesterday)
Dollar/Yen: 158.06 +0.15 yen
Dollar/Euro: $1.1249 +$0.0027
Dollar Index: 101.91 -0.26
Gold: $4,184.60 +$27.80
Bitcoin: 86,335 +615
Crude Oil: $87.92 -$1.51
DJIA: 51,61 +363
NASDAQ: 27,671 +194
S&P 500: 7826 +51
Hiring stalls
Two reports on the same labor market, two days apart, and they might as well have come from different planets.
ADP told us on Wednesday that private employers added 90,000 jobs in September. The government's count on Friday said 29,000. Realtor.com's Jake Krimmel calls it a clear miss, and the details underneath are worth a closer look.
Let’s start with the revisions. July, which had been revised up to a gain of 21,000 jobs, now shows a loss of 10,000. August was trimmed to 133,000 from 162,000. Together that takes 60,000 jobs off the prior two months and cools the rebound August seemed to promise. Economists had been looking for 84,000 new jobs, and prediction markets gave roughly even odds that September would top 100,000, so this landed far from where the crowd was looking. ADP's own breakdown showed how uneven hiring has been. Education and health services added 55,000 jobs, while financial activities lost 16,000. ADP also cautioned that its figures can differ notably from the government's count, and this month they did.
The unemployment rate rose to 4.2%, which sounds worse than it is. Krimmel points out that the unrounded rate only moved from 4.14% to 4.18%, a change of 0.04 points. Layoffs haven't picked up, and weekly jobless claims keep falling. What that adds up to is the low hire, low fire market we've had all year, and he expects it to hold into 2027. Employers aren't cutting people loose, but they also aren't adding many.
The Fed probably won't change course because of one soft report. Unemployment is still low, so there's no labor emergency to pull the committee's attention off inflation. Krimmel describes the Fed's stance as risk management, an effort to keep supply-driven inflation from getting worse in the face of geopolitical instability and higher energy prices. Markets had already been backing away from an October hike, with the odds falling from 69% on September 24 to under 30% before the report. After Friday, a hold looks even more likely, though the consensus still points to another hike before the year ends.
That matters for anyone with a mortgage in their future, because the pressure behind rates hasn't gone anywhere. The 10-year Treasury recently hit a 24-year high, and Freddie Mac's average 30-year rate has climbed from 6.66% to 7.28%. Krimmel notes that the 62 basis point jump since the start of September works out to about $19,000 less house on a budget of $2,000 a month for principal and interest.
September's housing data shows the strain. Pending sales fell 4.1% from a year ago, the biggest drop since March 2025. About 20.8% of listings had a price cut, the highest single month for reductions since October 2022. A sluggish job market on one side and tougher financing on the other leaves buyers and sellers squeezed at both ends. Krimmel's read is that the jobs picture will likely stay static this fall, so nobody should count on a particularly lively housing market either.
Mortgage rates have started under pressure today. The MBS market worsened by -54 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.
These are the three things that have the greatest ability to impact rates this week. 1) ISMs, 2) The Fed and 3) Treasury Auction.
1) ISMs: The most important economic release of the week is Monday's ISM Non Manufacturing (services) which accounts for about 2/3 of our entire economic engine. ISM Services PMI was reported at 54.9 versus expectations of 55.0. Bonds will focus on Prices Paid.
2) The Fed: We will get the Minutes from the last FOMC meeting on Wednesday and have a ton of Feds talking just about every day this week.
3) Treasury Auction: A large supply of longer term debt is going to hit the market this week:
10/06 3 year note
10/07 10 year note
10/08 30 year bond
This morning markets are seeing some pressure. Volatility has started at moderate levels but could easily become high any time this week.