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Market Analysis 10.17.25: Rates Are A Bit Better

Good Friday AM from your Hometown Lender,

Rates are a bit better today as the 10-yr note yield closed below the all-important 4.00% level yesterday.

Today we propped back up to 4.00% and are holding. Let’s see where we go from here. As of this am, rates are near the best level seen right before the last Fed meeting (but not quite as good). There is no reason to expect volatility today, however always stay alert knowing that we could see this window of opportunity suddenly close as suddenly as others have in the past since it is arguable that these improvements are built on market fear and speculation more than any real economic foundation.

From a higher level:

What rates did this week?

  • Mortgage rates ticked down again. Freddie Mac’s weekly survey shows the 30-yr fixed at 6.27% (15-yr: 5.52%). That’s a hair lower than last week and near 2025’s lows. Translation: rate sheets had a small tailwind all week. Freddie Mac+1
  • 10-yr Treasury gravity: The 10-yr hovered right around ~4.0% as yields eased on softer data and shutdown uncertainty. (YCharts shows 3.99% yesterday; multiple market wraps pegged the 10-yr just under 4.0% into today.) Lower yields = friendlier rate bias. YCharts+1

This week’s U.S. data & why it mattered

  • Jobless claims (unofficial estimates): With the data blackout, private tallies suggest initial claims dipped to ~215–217k for the week ended Oct 11 (down from ~234–235k). Take with a grain of salt, but the gist is “cooling, not cracking.” Bloomberg+1
  • Manufacturing mixed:
  • NY Empire State surprised up to +10.7 (growth). Federal Reserve Bank of New York+1
  • Philly Fed fell sharply to -12.8 (contraction) with hotter price components—reminding markets that disinflation isn’t a straight line. Reuters+1
  • Consumer sentiment (U. Michigan prelim): Essentially flat at 55.0—people are cautious but not panicked. SCA ISR+1
  • Housing pulse (builders): NAHB/Wells Fargo builder sentiment rose to a 6-month high, helped by easing mortgage rates and incentives—still below “good” (50), but improving at the margin. Reuters
  • Industrial Production: Not published today due to the shutdown (it was on the calendar). Markets looked through it and focused on rates + claims proxies. FRED+1

The political backdrop moving markets

  • Federal shutdown: We’re at Day 16 with the Senate again failing to advance funding; the longer this lasts, the data blackout grows (think CPI, retail sales, jobs), forcing the Fed and markets to steer with less visibility. That uncertainty tends to support lower yields in the short run. CBS News+1
  • Selective pay during shutdown: DHS/ICE/CBP and some law-enforcement personnel are slated to be paid despite the shutdown—politically notable but economically minor for rates. Reuters
  • Fed tone: Chair Powell emphasized “meeting-by-meeting” caution—labor is softish, inflation progress uneven. Markets lean toward incremental easing, but with long-end yields sticky on deficits and inflation uncertainty. Reuters+1
  • Trade noise: Renewed U.S.–China tariff tension is adding a small risk-off bid to global bonds (another nudge lower in yields). Reuters

“So… what does this mean for rates?”

  • Near term (days–weeks): With mortgages at ~6.25–6.5% and the 10-yr near 4.0%, the path of least resistance is sideways-to-slightly-lower as long as the shutdown extends and no hot inflation surprise appears. (“Float-friendly hours,” but intraday reprice risk still lives when headlines hit.) Freddie Mac+1
  • Next 1–3 months: The Fed meets Oct 28–29. Absent fresh official data, their tone may skew cautious; markets currently expect no abrupt moves and a gradual-easing bias into year-end. Long-end yields could stay around ~4% if growth cools and the shutdown persists; upside risk is sticky inflation once data return. Federal Reserve+1

What to tell clients (novice-friendly)

  • Payment reality: Every ⅛% rate change moves a $400k loan’s principal-and-interest by roughly $35–$40/mo—so these small weekly declines are real money over time. (Use today’s quotes, not headlines.)
  • Lock vs. Float:
  • Purchase, tight timelines: Lean lock—today’s pricing is competitive for 2025; don’t gamble with escrow dates.
  • Refi / flexible close: Measured float can be reasonable while 10-yr hangs near 4% and PMMS drifts lower, but set a hard target and auto-lock rules.
  • Inventory is improving: Slightly better builder sentiment and easing rates can translate into more choices heading into the holidays. Reuters

The week at a glance (Oct 13–17)

  • Mon–Wed: Fed speakers, shutdown headlines; Empire State positive surprised. Federal Reserve Bank of New York
  • Thu: Philly Fed contracted; private jobless-claims estimates showed moderation; Freddie Mac PMMS printed 6.27%. Reuters+2Bloomberg+2
  • Fri (today): No Industrial Production due to blackout; markets focused on yields ~4% and shutdown trajectory. Federal Reserve+1

What’s next / key watch-items

  • Fed meeting (Oct 28–29) and any Fed speakers filling the data void. Federal Reserve
  • Shutdown resolution (or not). A deal could re-ignite data and jolt yields if pent-up prints run hot; a longer shutdown keeps the “lower-visibility = lower-yields” bias in play. CBS News
  • Mortgage apps & lock volumes (MBA) and builder/real-estate surveys as near-term proxies while official releases are dark. Reuters

Bottom line for today: 

Rates are drifting a bit lower, helped by a softer long-end and a data blackout that reduces hawkish surprises. If you need certainty, lock the win. If you’ve got cushion, a disciplined float with alerts set just below current pricing is reasonable. And if anyone asks why you’re reading tea leaves instead of data… it’s because Washington turned off the kettle. 

Stay safe, enjoy the weekend, and make today great!