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Market Analysis 10.28.25: No End In Sight

Good Tuesday AM from your Hometown Lender,

Initial Market Analysis: Government shutdown day 28. No end in sight…

Rates are improving a little bit, although it won’t be much on the backs of oil prices settling. Lower oil prices = lower inflation = lower mortgage rates. Reprice risk on the day is low, should be a calm day ahead of tomorrow’s Fed meeting and Fed Chair Jerome Powell’s press conference.

There is a 7yr Treasury auction this afternoon, but with the continuing government shutdown there won’t be much else. I know I have shared it before, history has shown us that the time to lock is before the Fed announcement, not after. Rates have worsened after each of the last four fed rate cuts.

Market Analysis from a higher view:

1. Snapshot of the mortgage market today (10/28)

Treasury yields are holding the line.

The 10-year Treasury yield is sitting right around 3.99% today (down just a hair from yesterday). That’s important because the 10-year is the reference point lenders use to price mortgage-backed securities and therefore retail mortgage rates. When the 10-year stays near ~4%, it generally supports mortgage rates in the low-to-mid 6s instead of the 7s we saw earlier this year. FRED+1

Mortgage rates are hovering in the low 6s.

National 30-year fixed rates are being quoted around 6.1%–6.3% today depending on credit score, points, and occupancy. Several trackers put the national average ~6.15%–6.23%, which is the lowest level in over a year and noticeably below the ~7% range borrowers were staring at in early 2025. That drop is why refinances have started showing signs of life again. Freddie Mac+2Wall Street Journal+2

MBS pricing is still supportive.

The benchmark Fannie/Freddie 30-year UMBS 5.5% coupon has been trading in roughly the 101-06 to 101-11 range over the last several sessions. That kind of “101 handle” tells us lenders are getting stable secondary-market execution, which helps them keep rate sheets steady instead of widening margins to protect themselves. Mortgage News Daily

Oil is the wildcard, but less scary today.

West Texas Intermediate crude spent last week spiking above $61 on Russia-related sanction headlines (higher oil = hotter inflation risk), but today it’s slipped back toward about $60 a barrel. Cooling oil takes a little heat out of “inflation panic,” which is friendly for bonds and, indirectly, mortgage rates. Trading Economics+2Investing.com+2

Consumers are getting nervous.

The Conference Board’s Consumer Confidence Index ticked down again in October to 94.6, with households saying they’re more worried about prices, jobs, and the future. Confidence about right now is still okay, but expectations about the next six months fell below the recession-warning line. Slower confidence → slower spending → cooler growth → gentler pressure on rates. AP News+2Reuters+2

Bottom line for today:

  • Bond market: calm-ish.
  • Mortgage rates: low 6s and still marketable.
  • Inflation risk: tied to oil and tariffs, not broad wage pressure. Investing.com+2Reuters+2

2. Political + policy backdrop (yes, this is in your rate sheet)

We’re in Day 28 of a federal government shutdown.

Congress is still fighting over funding, with the Senate holding repeated procedural votes and still unable to advance a reopening bill. Each side is blaming the other, and the standoff has turned into a bargaining chip over health insurance subsidies and spending priorities. This is now a national labor/paycheck story, not just a D.C. drama. CBS News+1

Why you care as a lender:

  • A shutdown is a growth drag (furloughs, delayed pay, slower federal services). Slower growth tends to pull Treasury yields lower, which supports mortgage pricing.
  • BUT fewer functioning agencies means data delays (labor reports, some inflation inputs, housing-related federal services like flood insurance), which adds volatility because markets are guessing more. CBS News+2https://www.wowt.com+2

So ironically, Washington gridlock can be rate-friendly in the short run — but it also makes intraday swings uglier. “Politics lowered your rate” is not exactly a patriotic talking point, but it’s sort of true right now.

3. Housing tone going into November

Existing home sales finally climbed.

September existing home sales rose 1.5% month-over-month to a 4.06 million annual pace, the fastest since February. That’s also up 4.1% from a year ago. Inventory rose about 14% year-over-year to roughly 1.55 million units, which is the highest housing supply we’ve seen in about five years (though still below pre-pandemic norms). Median price: about $415,200, up ~2.1% year-over-year. The MortgagePoint -+3Reuters+3AP News+3

This matters because:

  • Buyers are re-engaging the moment rates get a “6-point-something” handle.
  • Sellers are finally negotiating instead of just remembering 2022 like it was a religion.
  • Time-on-market stretched to about 33 days, which means buyers are getting some breathing room again. Reuters+1

Affordability reality check for first-time buyers:

Even at ~6.2%, the typical monthly payment on a median-priced home is still high — roughly mid-$2,500s to mid-$2,600s with 20% down, according to recent agent/buyer surveys. That’s lower than the peak this spring (roughly $300 cheaper per month than May), but it’s not 2020 cheap. Wall Street Journal

So housing isn’t “fixed,” but it’s thawing. Slowly. Like a freezer someone left on defrost but never actually opened.

4. The Fed this week (aka: the main event)

The Federal Reserve is meeting today and tomorrow, Oct 28–29. Markets are overwhelmingly expecting another 0.25% rate cut in the Fed funds rate. That would take the policy rate down toward the 3.75%–4.00% range, the lowest since late 2022. Reuters+3Investopedia+3CBS News+3

Why the Fed is doing this:

  • The job market is softening — hiring has slowed, layoffs are showing up in big-name companies, and unemployment has crept higher. The Fed is openly saying they’re more worried now about keeping people employed than squeezing out the last 0.2% of inflation. Reuters+3Reuters+3AP News+3
  • Inflation is still above the 2% target, but it’s not accelerating across the board. Most of the heat lately is from things like tariffs and energy, not broad wage-price spirals. Reuters+2Reuters+2
  • The shutdown has choked off some government data, so the Fed is flying with partial visibility and leaning cautious. Investopedia+2AP News+2

What this means for mortgage rates:

  • The Fed does not directly set 30-year fixed rates.
  • But when the Fed cuts, investors expect slower growth going forward, which usually supports lower long-term yields (10-year Treasuries).
  • Lower 10-year yields → better MBS pricing → better retail mortgage rates. Historically, you often see mortgage rates improve around Fed cuts, but not always instantly and not always by the same amount. Wall Street Journal+2CBS News+2

In other words: a calm, jobs-focused Fed this week is a green light for rates to stay in the low 6s — or even drift under 6.00% later this quarter if the data cooperates. That “five-point-something” headline is what buyers are already asking about. The Economic Times+1

5. Key events for the rest of this week (10/28–10/31)

Today/Tomorrow (Tue–Wed 10/28–10/29): FOMC meeting.

Markets expect a 0.25% cut and a press conference that leans “we’re watching jobs, not panicking about inflation.” The tone of Powell’s Q&A can absolutely move rates intraday. Investopedia+2CBS News+2

Thursday (10/30): Advance Q3 GDP.

This is the “are we slowing gently or falling off a cliff?” report. A stronger-than-expected GDP number could nudge Treasury yields higher (pushing mortgage pricing slightly worse). A softer GDP print would do the opposite. Investopedia+1

Friday (10/31): PCE inflation (September).

The Fed’s favorite inflation gauge. Markets will zoom in on “core PCE.” If core PCE looks tame, traders will feel better about the Fed continuing to cut over the next couple meetings. If it pops, you’ll hear instant “sticky inflation” chatter, and bonds could sell off. CBS News+1

Translation: The back half of this week is basically “jobs vs. inflation: choose your fighter.”

6. Forward-looking rate expectations (next 2–4 weeks)

Let’s talk lanes:

Lane 1: Soft glide (base case).

  • Fed cuts 25 bps.
  • GDP shows slower-but-not-crashing growth.
  • Core PCE comes in calm.
  • Oil drifts around $60 instead of spiking again.
  • → The 10-year hangs around ~3.9%–4.1%.
  • → Retail 30-year fixed stays in the low 6s and could flirt with high-5s marketing headlines in November. AP News+3Trading Economics+3Investing.com+3

Lane 2: Inflation comeback.

  • GDP looks stronger than expected.
  • Core PCE is sticky.
  • Oil bounces back toward $62–$63+ and the market blames tariffs/energy.
  • → The 10-year jumps toward 4.15%+.
  • → Lenders worsen pricing (think a couple eighths higher). Investing.com+2Reuters+2

Lane 3: Risk-off / slowdown scare.

  • Powell sounds more worried about jobs than anyone expected.
  • Shutdown drags past Day 30 with no deal and louder stories about missed paychecks.
  • → Investors hide in Treasuries.
  • → 10-year could slip under ~3.9%.
  • → Lenders improve pricing, but reprices for the better could come and go fast midday. CBS News+2https://www.wowt.com+2

We’re currently cruising in Lane 1, with our blinker half on toward Lane 3.

7. Lock / float guidance you can actually use

If you’re closing in the next 30 days:

Lean lock bias. You’re inside the blast radius of (1) the Fed decision tomorrow, (2) GDP Thursday, (3) PCE Friday. Any one of those can move pricing quickly, and you don’t want a surprise to blow up someone’s DTI 10 days before docs. Investopedia+2CBS News+2

If you’re 45–90 days out:

Float with rules, not vibes.

Set triggers like:

  • “If the 10-year convincingly breaks above ~4.15%, we lock that day,” or
  • “If lender cost worsens by ~0.25% in rebate, we stop floating.”
  • This turns ‘rate watching’ into a strategy instead of an emotion. Trading Economics+2Wall Street Journal+2

Points vs. no points:

At ~6.2%, sometimes buying a small point to drop the rate .125–.250% costs less than gambling on the macro. That’s a controllable lever for the borrower — and sounds smarter than “let’s pray at the altar of Jerome Powell.” Wall Street Journal+1

8. Market Analysis: Bottom Line Me

“The wild card is oil. If energy prices stay near $60 instead of spiking, inflation pressure stays calmer and that’s good for rates.” Trading Economics+2Investing.com+2

“Mortgage rates are now hovering near 6.1%–6.3%, the best levels in over a year. Buyers who were priced out at 7% are stepping back in.” Freddie Mac+2Wall Street Journal+2

“The Fed is meeting today and tomorrow (Oct 28–29) and is widely expected to cut rates again to support a slowing job market. That’s helping hold mortgage rates down.” Investopedia+1

“Home sales actually went up 1.5% in September and inventory is the highest in about five years. Buyers finally have a little leverage again.” Reuters+2AP News+2

“We’re on Day 28 of a federal shutdown, which is slowing parts of the economy. Ironically, slower growth can be good for bond yields — and that can spill into better mortgage pricing.” CBS News+1

Stay safe and make today great!