You are currently viewing Market Analysis 10.30.25: Rates Up

Market Analysis 10.30.25: Rates Up

Good Thursday am from your Hometown Lender,

Rates today will have worse pricing, with rates up about an eighth of a point.

Moves like this always feel bigger in the moment… especially when clients, agents, and prospects are reaching out about how “the Fed just cut rates “. Today’s rates are about the same as mid-October, just a couple weeks ago. 

Reprice risk today is moderate… markets quickly adjusted yesterday to Fed Chair Jerome Powell’s comments throwing cold water on a December Fed rate cut, with the 10yr yield jumping to 4.07 and mortgage bonds giving up about -30bps. 

Recap/Summary of yesterday’s Fed action…

As anticipated, markets really didn’t move much after the Fed statement, since the quarter-point cut was already priced in and the announcement that the Fed would stop its balance sheet runoff for Treasuries in December. The Fed will continue to runoff mortgage-backed securities though, and will reinvest those proceeds into Treasury bills, in line with its goal to return to a portfolio consisting primarily of Treasuries. That was why we didn’t see any love to mortgage bonds after the announcement.

The fly in the ointment (and which has been the case in 5 of the last 5 rate cuts) is always the dreaded press conference where Chairman Powell never gives markets reason to be happy. It happened again yesterday when during the press conference he said, “A further reduction in the policy rate at the December meeting is not a foregone conclusion… far from it.” The “far from it” was like icing on the cake, or the uppercut after the jab – it sent rates to the mat as bonds sold off, and Treasury yields jumped right after the words left his mouth. Markets immediately went from pricing in an 85% probability of a December cut to about a 65% probability… and bonds sold off.

The good news (as there must be some, right?) is that I love watching the technical trades and being a geek here, we are still in the same trading range as we have been and even better, we held the line of support, all be it barely, and for now, we are not in bad shape at all, but Powell has an uncanny ability to rip markets apart. He is 5 for the last 5. 5 rate cuts, 5 hawkish statements, and 5 times rates got worse. Keep it in mind for the December meeting where the Fed will cut again.

Market analysis from a higher vantage point:

What moved rates today (10/30)

  • Fed follow-through, but a hawkish nudge: The Fed cut 25 bps yesterday to 3.75%–4.00%, citing a softer labor backdrop and data gaps from the shutdown. Powell also said a December cut isn’t guaranteed, which nudged yields up this morning. Reuters+1
  • Treasuries: After the presser, the 10-year pushed back above ~4.10% today, retracing some October gains as markets dialed back “auto-cut” expectations. Barron’s
  • Mortgage rates (weekly): Despite today’s yield pop, Freddie Mac’s PMMS printed another new 2025 low: 30-yr at 6.17% (week ending 10/30), the 4th straight weekly decline. (Reminder: PMMS lags daily pricing.) Freddie Mac+1
  • Applications: On lower rates, MBA apps rose 7.1% last week; refi share hit ~57%—evidence the “low-6s” are pulling people off the sidelines. MBA+1
  • Oil steady-ish: WTI ~$60 after tariff headlines cooled trade tensions; range-bound oil tempers inflation fears but remains a swing factor. Reuters+1

Today’s big data: GDP (advance, Q3)

  • BEA’s advance Q3 GDP dropped this morning (after Q2 was revised up to 3.8%). Consensus and nowcasts had pointed to ~3–4% growth; investors parsed the details for momentum and price pressures. (BEA schedule confirms today’s release; Q2 reference shown.) Bureau of Economic Analysis+2Bureau of Economic Analysis+2
  • How to explain this simply: “Growth is cooling from summer strength but not collapsing—good enough for soft-landing hopes, not hot enough to force higher rates.”

The political backdrop (why D.C. is in your rate sheet)

  • Shutdown: Day 30. Senate talks continue with cautious optimism but no deal yet. CBO-cited tallies peg the hit to GDP at ~$7B so far if it persists. Shutdowns = mild growth drag (bond-friendly) and messier data (volatility). CBS News+2North Jersey+2

Where retail mortgage rates sit

  • National 30-yr fixed: low 6.1%–6.3% on live sheets for top-tier files; PMMS 6.17% is your consumer-safe talking point. If the 10-yr holds >4.1% into tomorrow’s PCE, lenders could shade rates up a hair. Freddie Mac+1

Market Analysis: what’s next (date-stamped catalysts)

  • Fri 10/31 – PCE (Sep, 8:30a ET): The Fed’s preferred inflation gauge. A tame core PCE supports staying in the low-6s; a surprise pop risks a quick rate wobble. Bureau of Economic Analysis
  • Ongoing: Shutdown headlines; oil (WTI near ~$60) tied to tariffs/OPEC+ chatter. Reuters

Market Analysis: how to explain today

  • Mortgage rates follow the 10-year over time. Fed cuts don’t directly set 30-yr rates, but they shape growth/inflation expectations → 10-yr yield → MBS pricing → lender rate sheets. Powell’s “December not assured” comment pushed yields up a touch even after a cut. Reuters
  • Good news: National average fell to 6.17% this week; affordability improved versus the 7s. Caveat: We’re headline-sensitive into PCE. Freddie Mac

Market Analysis: near-term rate scenarios (next 1–3 weeks)

  1. Base case—Sideways/soft bias: GDP decent, core PCE tame, shutdown lingers; 10-yr ~3.95–4.10%, retail 30-yr stays low-6s (occasional high-5s with points). Bureau of Economic Analysis
  2. Hotter-data risk: Core PCE surprises, oil pops → 10-yr 4.15–4.30%, pricing worsens a couple of eighths. Reuters
  3. Risk-off jolt: Shutdown stress or weak prints → 10-yr sub-3.9%, lenders improve, but reprices can be fast/fleeting.

Market Analysis: practical lock/float playbook

Refi watchlist: With apps +7.1% and refis ~57% of volume, invite past clients to run “no-cost” or “low-cost” scenarios—especially those holding 7-handles from early 2025. MBA+1

Closing ≤30 days: Light lock bias. You’re inside the blast radius of PCE + weekend shutdown headlines.

45–90 days out: Float with guardrails. Pre-set triggers: lock on a 10-yr break >~4.15% or if lender costs worsen ~0.25%. (Document it—clients relax when there’s a plan.)

Structure > guesswork: With rates mostly range-bound, points/credits often move the payment more than macro noise. Price buydowns vs. list-price cuts; show breakevens.

Stay safe and make today great!