Holiday Week Volatility With Zero Consequence
Although there was a brief negative reaction to this morning's economic data, the impact was minimal. Random holiday-week volatility accounted for bigger swings, but those swings ultimately canceled each other out. By the 3pm close, bonds were close enough to unchanged levels. That makes today truly forgettable in the bigger picture. Trading doesn't get real/serious again until December. NOTE: Friday is technically open until 2pm ET, but as is our custom, we will only publish commentary on an "as-needed" basis (i.e. if the movement is minimal, you won't hear from us until Monday).
Econ Data / Events
Durable goods (Sep)
0.5% vs 0.3% f'cast, 2.9% prev
Jobless Claims (Nov)/22
216K vs 225K f'cast, 220K prev
Continued Claims (Nov)/15
1,960K vs -- f'cast, 1974K prev
Market Movement Recap
09:05 AM modestly weaker after data. MBS down 3 ticks (.09) and 10yr up 2.2bps at 4.018
12:23 PM Volatility centered on 10am ET, but now back near best levels. MBS unchanged and 10yr up only 0.6bps at 4.002
02:44 PM Approaching 3pm CME close with 10yr yields nearly unchanged at 3.999 and MBS down 1 tick (.03).
Wednesday was far less eventful than the first two days of the week as far as mortgage rates were concerned. The average lender raised rates just a hair, but apart from yesterday, these are the lowest levels in a month and very close to the lowest levels in more than 3 years. Bond markets and mortgage lenders will be closed tomorrow for Thanksgiving. While Friday is technically open, 9 times out of 10, it may as well not be. In other words, the Friday after Thanksgiving rarely sees any meaningful movement in mortgage rates or the underlying bond market.
The new phone books are here, the new phone books are here! Oh, wait a minute. The new conventional conforming loan limits are here! The new conventional conforming loan limits are here! True, lenders that are entirely focused on non-Agency products like non-QM (without many of the loan level price adjustments or gfees) may not care too much, but for most, Freddie Mac’s and Fannie Mae’s changes are followed closely. For 2026 we’re up from 2025’s $806,500 to $832,750. This beats the $819,000 by about $13k that many lenders and investors moved to in late September/early October. They can all rejigger their systems. (More conforming news below.) All this focus on conventional conforming programs reminds me that LO comp is still a huge issue, and the source of litigation; it shouldn’t be put on the backburner. I continue to hear promises that made to potential recruits that are in violation of LO comp rules. Who is going to research and penalize infractions? The CFPB? Lenders shouldn’t have to pay the same for a conventional conforming loan as a bond program, and most agree that change is needed: LO comp rules being ignored can hurt companies. (Today’s podcast can be found here and this week’s are sponsored by The Big Point of Sale, which delivers a fast, flexible, and low-cost mortgage POS that gets lenders up and running in hours (not months) while empowering loan officers and consumers to collaborate seamlessly from any device. Hear an interview with Panorama’s Hector Amendola on home sales trends, borrower sentiment, rate psychology, and how originators are winning business in the current environment.)
Bonds were just slightly weaker overnight but are losing more ground in early trading. The culprit: both of this morning's 8:30am ET economic releases. Jobless Claims data is probably the bigger deal as it continues to show no signs of labor market distress (216k vs 225k f'cast). The other report, Durable Goods, is more stale (pre-shutdown), but was also clearly upbeat with the core cap-ex figure coming in at a robust 0.9% vs 0.2% f'cast. The resulting sell-off in bonds is minimal but not massive. 10yr yields are up only 2.5bps at 4.021 and MBS are down less than an eighth.
Best Closing Levels in Nearly a Month
Bonds improved only moderately on Tuesday in a move that's just as easily chalked up to random holiday-week volatility as any of the day's data/events. If we're determined to give credit to particulars, we can cite things like the 13.5k decline in weekly ADP payrolls, or the market's favorable reaction to rumors that Kevin Hassett is the front-runner to be the next Fed Chair (Hasset is assumed to be extremely dovish). Most notably, bonds took no damage from another day of upward momentum in stock prices. Yields closed out with 10s right at 4.0%--the best end of day marks since the day before the October 29th Fed announcement (6th lowest close in more than a year).
Econ Data / Events
ADP Employment Change Weekly
-13.5K vs -- f'cast, -2.5K prev
Core Producer Prices MM (Sep)
0.1% vs 0.2% f'cast, -0.1% prev
PPI YoY (Sep)
2.7% vs 2.7% f'cast, 2.6% prev
Producer Prices (Sep)
0.3% vs 0.3% f'cast, -0.1% prev
Retail Sales (Sep)
0.2% vs 0.4% f'cast, 0.6% prev
Retail Sales Control Group MoM (Sep)
-0.1% vs 0.3% f'cast, 0.7% prev
FHFA m/m home price change
0.0
Consumer Confidence
88.7 vs 93.4 f'cast, 94.6 prev
Pending Home Sales
76.3 vs 74.8 prev
Market Movement Recap
08:35 AM Lots of data but no reaction. MBS up 2 ticks (.06) and 10yr down 0.7bps at 4.02
10:04 AM holding best levels after more data. MBS up 3 ticks (.09) and 10yr down 2.3bps at 4.005
12:22 PM Rates rallying on Hassett Fed Chair rumors. MBS up 6 ticks (.19) and 10yr down 3.5bps at 3.993
04:24 PM Heading out with MBS still up 6 ticks (.19) and 10yr down 2.6bps at 4.001
Watching Rates
Check our some recent articles and posts about current rates.
Wednesday was far less eventful than the first two days of the week as far as mortgage rates were concerned. The average lender raised rates just a hair, but apart from yesterday, these are the lowest levels in a month and very close to the lowest levels in more than 3 years. Bond markets and mortgage lenders will be closed tomorrow for Thanksgiving. While Friday is technically open, 9 times out of 10, it may as well not be. In other words, the Friday after Thanksgiving rarely sees any meaningful movement in mortgage rates or the underlying bond market.
Mortgage rates moved nicely lower on Tuesday with the average lender very close to the 2025 lows seen in late October. These levels are effectively right in line with the lowest since late 2022. If today's drop seems abrupt, that's because it is. In fact, it's a bigger drop than the underlying bond market justifies. There's a reason for this and we covered it in detail back in September: Why Rates Seem to Drop More Quickly as They Approach Certain Thresholds. Rather than credit any of the recent underlying events, the improvement in rates/bonds has more to do with idiosyncratic trading conditions that are often seen on major holiday weeks. That said, some of today's data and events contributed. These include another week reading in weekly employment numbers from ADP as well as a reaction to rumors that rate-friendly Kevin Hassett will be the next Fed Chair. [thirtyyearmortgagerates]
Thanksgiving weeks can be weird for mortgage rates. This has to do with the fact that rates are dictated by the bond market and the bond market depends on real live people who can actually be out of the office on holiday weeks. The lighter levels of participation can increase volatility and cause random movement for no apparent reason. We'll cross that bridge if we come to it. As far as Monday is concerned, there's no drama or weirdness to report. Bonds improved modestly throughout the day, thus allowing mortgage rates to move modestly lower. Because rates were closer to the higher end of their recent range at the end of last week, the small drop means we're still very much inside the prevailing range. The next two days bring some backlogged economic data. Combined with the typical holiday-week caveats, volatility risk will thus be higher through Wednesday.
Recent stock market losses have gotten a lot attention in the news recently. While there's no reliable correlation between stocks and interest rates, when stock losses are as big as they have been recently, it increases the tendency for rates to move in the same direction. That was definitely the case today. Bonds (which dictate rates) improved overnight as stocks sank further. But as early as 7am, a reversal began to take shape. The catalyst was a comment from NY Fed Pres Williams who said he sees a good case for a rate cut at the upcoming December meeting. On one hand, improved rate cut odds are typically good for longer term interest rates. That was apparent in the immediate moments following the the comment. But in many cases, such comments are also good for stocks. On occasions where stocks aren't in the throes of a big sell-off, the net effect is often a divergence between stocks and rates (i.e. stocks move higher on Fed rate cut enthusiasm and bonds move lower for the same reason). In this week's case, because a decent amount of downward pressure on rates is attributable to recent stock losses, the rebound in stocks quickly gave way to upward pressure in rates. Fortunately, the overnight gains were large enough to absorb that upward pressure. As such, mortgage rates managed to hold on to a modest improvement versus Thursday's latest levels. This keeps rates in the same narrow, sideways range that's been intact since the late October Fed meeting. [thirtyyearmortgagerates]
