Token Year-End Volatility
Wednesday's shortened session offered more excitement than the first two days of the week. There was a modicum of legitimate data-driven selling this morning in response to the jobless claims data. Bonds had trudged most of the way back toward unchanged levels by 1pm ET, but volatility picked up again at that point. While 2pm is the official early close, 1pm is the cut-off for many of the largest traders to close out their year-end positions. This makes for a big spike in volume at that time, and it can also result in a quick jolt to prices/yields. As far as year-end jolts go, today's was pretty normal and should not be taken as a sign of any underlying predisposition in the market.
Econ Data / Events
Continued Claims (Dec)/20
1,866K vs -- f'cast, 1923K prev
Jobless Claims (Dec)/27
199K vs 220K f'cast, 214K prev
Market Movement Recap
08:34 AM losing ground after claims data. MBS down 3 ticks (.09) and 10yr up 2.1bps at 4.144
12:11 PM pushing back from weaker levels. MBS down only 1 tick (.03) and 10yr up 1.5bps at 4.138
01:09 PM Some quick year-end selling pressure. MBS down an eighth and 10yr up 3.4bps at 4.158
Although Freddie Mac's weekly mortgage rate survey (released today) suggested the lowest rates since October 2024, our daily numbers offer a bit more nuance. To be sure, October 28th and September 16th both saw distinctly lower rates this year. Today's rates are right in line with yesterday's as well as last Friday's. In other words, this week is flat compared to Friday although the average rate is lower so far. The bond market closes early today and will be fully closed tomorrow. Bonds reopen on Friday and then will be fully open for a normal week of trading next week. [thirtyyearmortgagerates]
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Human traders may be extremely underrepresented on today's half-day trading session, but the robots/algos know what to do with a sub-200k Jobless Claims print. Robots are also not smart enough to know that the sub-200k print is likely distorted...
Modest Recovery From Morning Weakness
Bonds were slightly weaker this morning in a move that looked like it might have been significant when compared to yesterday's narrow range. But in a just-barely-wider context, today's volatility was just as inconsequential as almost any of the days in December so far. With that, we'll continue to count down to next week's bigger-ticket data and more robust trader participation.
Econ Data / Events
Case Shiller Home Prices-20 y/y (Oct)
1.3% vs 1.1% f'cast, 1.4% prev
CaseShiller 20 mm nsa (Oct)
-0.3% vs -- f'cast, -0.5% prev
FHFA Home Price Index m/m (Oct)
0.4% vs 0.1% f'cast, 0% prev
FHFA Home Prices y/y (Oct)
1.7% vs -- f'cast, 1.7% prev
Chicago PMI (Dec)
43.5 vs 39.5 f'cast, 36.3 prev
Market Movement Recap
10:10 AM Moderately weaker overnight and sideways so far. MBS down an eighth and 10yr up 2.7bps at 4.135
12:02 PM bouncing back a bit. MBS down only 1 tick (.03) and 10yr up 1.2bps at 4.119
03:14 PM Still mostly sideways. MBS down 2 ticks (.06) and 10yr up 2.1bps at 4.128.
Watching Rates
Check our some recent articles and posts about current rates.
Although Freddie Mac's weekly mortgage rate survey (released today) suggested the lowest rates since October 2024, our daily numbers offer a bit more nuance. To be sure, October 28th and September 16th both saw distinctly lower rates this year. Today's rates are right in line with yesterday's as well as last Friday's. In other words, this week is flat compared to Friday although the average rate is lower so far. The bond market closes early today and will be fully closed tomorrow. Bonds reopen on Friday and then will be fully open for a normal week of trading next week. [thirtyyearmortgagerates]
Mortgage rates continue operating in an excruciatingly narrow range near their lowest levels of the past few years. Yesterday was the 6th best day of 2025. Today is tied for 7th place after rates moved 0.01% higher on average. While the underlying bond market is fully open today, it's a slow time of year in terms of volume and volatility. Bigger movement becomes more likely by the end of next week thanks to the return of important economic reports and stronger trader participation after holiday absences.
With another holiday closure on deck and light calendar of events, the rate market is off to another uneventful start this week. In fact, the average lender barely budged from last Friday. But it was enough for MND's 30yr fixed rate index to tick down by 0.01%. This is the lowest level since October 28th--just barely edging out the lows seen on November 25th. There were only 5 days in November and one day in September with lower rates. Before that, you'd have to go back to September 2024 to see anything lower. As always, there's never any way to know what's next for rates. The outcome of next week's economic data could certainly have a say in that. What we do know is that the present zone has been a recurring lower boundary for the range going all the way back to late 2022.
Because mortgage rates are determined by the bond market, a boring market day typically translates to a boring mortgage rate day. But that's not entirely true today. While the level of movement is indeed very small, it only took a small movement to get the average 30yr fixed rate down to their lowest levels since the end of October. Next week should be another slow one for rates, but things should pick up progressively as 2026 gets underway.
