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Market Analysis 10.31.25: A Bit Better

Good Friday AM from your Hometown Lender,

Rate sheets today could be a bit better than yesterday AM rate sheets, and reprice risk on the day is low.

Mortgage bonds improved a bit better through the late morning and early afternoon yesterday, giving many lenders a reason to improve pricing and reprice better. However, those gains faded away through the mid-to-late afternoon, hosing down hopes that we might not see rate sheets continue to worsen heading into next week.

This morning though bonds started weak but turned it around and are now better on the day, opening the door to float a bit and see how the day plays out. If bonds can’t hold the gains, locking for protection becomes more of a good idea. However, if the gains hold, we could risk seeing what next week brings.

Market Analysis at a higher level:

What moved rates today (10/31)

  • Treasury anchor: The 10-year Treasury is hovering near ~4.10% this morning, a touch above mid-week levels after the Fed cut but sounded cautious on further moves. Mortgage pricing will key off whether the 10-yr finishes the day above or below ~4.10%. MarketWatch+1
  • Fed (Wed 10/29): The FOMC cut 25 bps and flagged rising downside risks to employment. Cuts don’t set 30-yr rates directly—but they shape growth/inflation expectations that drive the 10-yr and MBS pricing. Federal Reserve
  • Mortgage rates (weekly): Freddie Mac PMMS = 6.17% on the 30-yr fixed (week of 10/30), the 4th straight weekly decline and a 2025 low. PMMS lags; your live sheets still float with MBS/10-yr. Freddie Mac+1
  • Apps and refis: MBA shows applications up w/w and refi share at 57.1%—evidence that “low-6s” are pulling homeowners off the sidelines. MBA+1
  • Oil: Crude is broadly stable around the low-$60s; a fresh Reuters poll says ample supply + soft demand should cap prices—generally disinflation-friendly unless shocks return. Reuters

Today’s data: PCE (Sep) — the Fed’s preferred inflation gauge

  • Timing: The Personal Income & Outlays report (incl. core PCE) is due this morning (8:30 a.m. ET). Consensus heading in: roughly +0.2% m/m core, ~2.9% y/y core. Tame prints support bonds; a surprise pop could nudge yields up. Bureau of Economic Analysis+2Bureau of Economic Analysis+2

Market Analysis: This week’s other macro pieces (why rates dipped before wobbling)

  • Q3 GDP (advance, Thu 10/30): Markets parsed “slowing but not stalling” growth—still consistent with a soft-landing narrative and a cautious Fed. (BEA schedule confirms release.) Bureau of Economic Analysis
  • Consumer confidence (Tue): Conference Board index fell to 94.6, with expectations at 71.5 (below the recession-watch line) → softer demand tone = bond-friendly. AP News
  • Politics (shutdown): Day 31 of the federal shutdown. CBO pegs the hit at $7–$14B depending on duration. Shutdowns are a mild growth drag (often supportive for yields) but elevate headline volatility. Reuters+2CBS News+2

Where retail mortgage rates sit (client context)

  • National 30-yr fixed: Most top-tier scenarios are low-6s today; the weekly 6.17% headline is a simple talking point for consumers. If the 10-yr holds >~4.10% after PCE, lenders could shade pricing slightly worse intraday. Freddie Mac+1

How to explain the market analysis

  • Mortgage rates ≈ 10-yr Treasury + MBS spreads. The Fed’s cut helped expectations; weak confidence + steady oil reinforced the move. But we’re in a data-sensitive window (PCE today), so rate sheets can still whipsaw. AP News+1

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

  1. Base case — Sideways with a soft bias: PCE comes in tame, shutdown lingers, oil contained → 10-yr ~3.95%–4.10%, retail 30-yr fixed stays low-6s (high-5s with points). Reuters
  2. Hotter-data risk: Core PCE surprises, oil perks up → 10-yr 4.15%–4.30%, rate sheets worsen a couple of eighths. MarketWatch
  3. Risk-off jolt: Shutdown stress or weak prints → 10-yr slips <~3.90%, lenders improve—but gains can be fleeting around headlines. CBS News

Practical lock/float playbook of market analysis

Structure > guesses: In a mostly range-bound tape, points/credits (or temporary buydowns) often move the payment more than chasing a macro headline.

Closing ≤30 days: Keep a light lock bias—you’re inside the PCE/Shutdown headline zone, and a small worse-case move can blow up ratios faster than a small improvement helps.

45–90 days: Float with guardrails. Pre-set triggers: lock on a 10-yr break >~4.15% or if lender costs worsen by ~0.25%. This turns “watching rates” into a plan. (Use the PMMS 6.17% to frame expectations.) Freddie Mac

Happy Halloween! Stay safe and make today great!