Uneventful And Slightly Stronger
Although volumes picked up a bit versus Friday, no one would confuse the late December bond market from exhibiting any unexpected signs of life. A stronger open in Europe made for a modest improvement overnight and almost all of the domestic session was spent treading water at those same levels.
Econ Data / Events
Pending Home Sales
79.2 vs 74.9 prev
Market Movement Recap
10:12 AM Modestly stronger overnight and holding sideways so far. MBS up 2 ticks (.06) and 10yr down 1.6bps at 4.117
03:38 PM Minimal volatility all day. MBS up 2 ticks (.06) and 10yr down 1.9bps at 4.114
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.
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In addition to this week's holiday closure (early close Wednesday, fully closed Thursday), the econ calendar is also lacking in terms of potential sources of volatility. A majority of any meaningful momentum is most likely to come from month/quarter/year-end trading today and tomorrow, but think of that more like a caveat for any incidental movement rather than a prediction. Monday is off to an OK start with modest overnight gains driven by rally in EU bonds after their return from holiday. Treasuries gladly followed in the illiquid overnight hours, but have been less willing to do so now that the domestic session is underway.
Bonds End Unchanged After Another Quiet Session
This is essentially placeholder commentary to serve as Friday's recap even though no commentary is needed this week. Bonds saw some incidental strength in the AM and weakness heading into the PM. The net effect was unchanged trading levels by the 3pm CME close.
Market Movement Recap
10:31 AM modestly stronger overnight and sideways so far. MBS up 3 ticks (.09) and 10yr down 1.2bps at 4.12
12:27 PM Off the best levels. MBS now unchanged and 10yr up 1bps at 4.142
02:31 PM Holding sideways with no additional weakness. MBS unchanged and 10yr up less than 1bp at 4.138
Watching Rates
Check our some recent articles and posts about current rates.
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.
It was a short day for the bond market that underlies mortgage rates, but a good one. A side effect of holiday weeks and early market closures is a bit of random volatility without any obvious justification. When volume and participation are low, bonds can move a bit more than they otherwise might. All that to say today's improvement was luck of the draw, but we won't object to the result. The average top tier 30yr fixed rate fell to the lowest level since November 25th. The caveat is that the range has been fairly narrow during that time. [thirtyyearmortgagerates]
Mortgage rates have broadly been in a narrow holding pattern for the past 4 months and an even narrower range during December. Today will do nothing to change that with the average lender ending the day exactly where they left of yesterday. Earlier today, however, the average lender was offering slightly higher higher rates. The upward pressure came courtesy of the bond market's reaction to stronger GDP numbers for Q3. But that initial reaction proved to be a temporary overreaction, exacerbated by lighter trading participation associated with the holiday week. In general, lower participation greases the skids for volatility, essentially magnifying the impact of events that might not have much of an impact otherwise. The bond market is technically open tomorrow (and thus, lenders will publish mortgage rates), but it should be even more heavily affected by holiday trading vibes. Also, there isn't much in terms of important econ data to cause the kind of volatility seen today--no to mention the fact that today's volatility ultimately proved to be non-existent.
