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Market Analysis 10.21.25: A Little Improved

Good Tuesday morning from your Hometown Lender,

Rates this morning are a little improved.

Mortgage bonds have been making small, steady improvements since early October, and this morning are testing a technical resistance level from earlier best levels of 2025 hit in September.

The fact that the 10yr Treasury yield is below 4%, which is lower than it was last time, is a signal that we could see even better rate sheets coming… but it is NOT a guarantee.

At a higher level:

What moved markets today (10/21)

  • Shutdown overhang: We’re in week 4 of a federal government shutdown. AP reports fresh furloughs at the National Nuclear Security Administration and broader program impacts — a real-economy drag that, at the margin, tends to support lower Treasury yields (risk-off + slower-growth vibe). AP News+3AP News+3AP News+3
  • Oil keeps sliding: WTI hovering near $57 this morning. Lower energy prices cool headline inflation pressure; several strategists (e.g., Yardeni) argue this could pull the 10-yr toward ~3.75% if the trend sticks. Translation for borrowers: a friendlier backdrop for rates — barring shocks. Bloomberg+1
  • Treasury yields: The 10-year ended last week around 4.02% and has been probing just under 4% intraday since; the tone is “softening but choppy.” That’s the anchor for secondary MBS pricing and retail rate sheets. FRED
  • Mortgage rates level-setting: Freddie Mac’s weekly survey (through Oct 16) showed rates edging down and refi curiosity picking up. (Next weekly print is Thu 10/23.) Daily sheets will still wobble with the 10-year/MBS, but the broader range has narrowed. Freddie Mac

The rest of this week — key catalysts (simple, date-stamped)

  • Thu, Oct 23 — Existing Home Sales (Sep): First housing print of the week; market will parse inventory, days-on-market, and prices for demand clues. Release at 10:00 a.m. ET. National Association of Realtors+1
  • Thu, Oct 30 — GDP (Q3, advance): Not this week, but close enough that markets will start handicapping it now. Growth vs. disinflation narrative matters for yields. Bureau of Economic Analysis
  • Fri, Oct 31 — PCE (Sep): The Fed’s preferred inflation gauge; core PCE trajectory is the main character for rate-cut odds into year-end. Bureau of Economic Analysis+2Bureau of Economic Analysis+2

How to explain today to clients (novice-friendly)

  • Think of mortgage rates as hitchhikers to the 10-year Treasury yield. When growth/inflation fears cool (shutdown drag + cheaper oil), investors buy bonds, yields dip, and mortgage pricing can improve — unless something jolts risk sentiment the other way. FRED+1
  • Today’s tone: cautious, slightly supportive for rates. But we’re in a news-whipsaw zone (shutdown headlines, earnings, geopolitics), so intraday reprices remain possible.

Near-term rate scenarios (next 1–3 weeks)

  1. Soft-landing glide (base case): Oil stays subdued, shutdown lingers but doesn’t spiral, data cools modestly → 10-yr drifts 3.85%–4.05%, retail 30-yr fixed mostly sideways to slightly better. Bloomberg
  2. Upside growth/inflation surprise: Hot GDP/PCE or a fast shutdown resolution with fiscal noise → 10-yr re-tests 4.15%–4.30%, rates tick up. Bureau of Economic Analysis+1
  3. Risk-off lurch: Geopolitical flare or sharp data miss → 10-yr tests 3.70%–3.80%, rate sheets improve, but volatility/extension risk rises for pipelines. (Inference based on current correlations and downside oil/earnings risks.) Bloomberg

Practical playbook (what I’d tell a first-time buyer or refi lead)

  • If you’re within ~30 days of closing: Still a light lock bias — you’re trading small potential gains for removal of event risk (shutdown twists, Thu housing print, and next week’s GDP/PCE).
  • If you’re 45–90 days out: Float with guardrails — set target rate/pricing and auto-lock if the 10-yr convincingly pops back above ~4.15% or if GDP/PCE chatter turns hot.
  • Cost check: In a sideways market, points vs. no-points decisions matter more than headline APR. Price the breakeven carefully across a few coupon buckets.

Talking points you can lift for emails/social

“Freddie Mac’s survey shows rates eased last week and have been range-bound — shoppers have a window, but keep a quick-trigger plan.” Freddie Mac

“Lower oil is quietly helping the inflation fight — that’s good for bonds and mortgage rates.” Bloomberg

“We’re navigating week-4 of a shutdown; historically that nudges yields lower, but headline risk can whipsaw rate sheets intraday.” AP News

“Housing prints hit Thursday (Existing Home Sales). The bigger rate movers land next week: Q3 GDP (10/30) and PCE inflation (10/31).” National Association of Realtors+1

Stay safe and make today great!