Rates are choppy today and seeing them worsen a tad (improving though as I type).

It doesn’t look like markets are as concerned about the government shutdown as we were led to believe last week, as the shutdown enters its sixth day with no end in sight. There seems to be little pressure on either party yet to make any concessions, and it’s no longer helping mortgage rates.

Unless that changes, it’s not likely we see much improvement to rate sheets this week.

Bonds starting today much worse than we would have expected Friday, mainly due to events in France and Japan that have rippled through global bond markets. In France, the prime minister has resigned, while in Japan a new pro-stimulus leader was elected. We won’t dig too deep here, but the effect this morning is that it pushes up the yield on the 10yr and mortgage bonds lost a bit more ground after losing ground Friday.

From a higher vantage point.

Mortgage market overview for October 6, 2025

Mortgage rates are choppy but biased lower over the medium term. A recent government shutdown has delayed key labor data, creating a “data blackout” that’s pushing investors to rely on more volatile private reports. That uncertainty, together with cautious commentary from Federal Reserve officials, is keeping daily rate swings elevated even as the broader path still points to gradual easing into 2026.

What’s driving rates right now

Data blackout: With official jobs data delayed by the shutdown, the Fed and markets have less visibility on the labor backdrop, increasing near-term volatility in bonds and mortgage-backed securities. During a similar episode in 2018–19, data gaps contributed to the Fed holding rates steady until information resumed.
Private labor reports: ADP reported a 32,000 private-sector job loss in September, and Challenger announced 54,064 job cuts, with hiring plans at their lowest since 2009—signals of cooling that support an eventual easing bias but are noisier than official data.
Fed tone: After a rate cut in September, some officials signaled openness to further easing, while others (including Chicago Fed President Austan Goolsbee and Dallas Fed President Lorie Logan) urged caution about cutting too soon given sticky inflation and limited data—netting to a likely “hold-steady” stance until clearer data arrives.

Political and geopolitical context impacting expectations

Domestic politics: The shutdown’s duration matters. A quick resolution that restores normal data flow reduces uncertainty and rate volatility. Prolonged disruption raises risk premium and can keep mortgage rates from falling as fast, even if the economy is cooling.
Global headlines: Ongoing geopolitical tensions can trigger risk-off moves that briefly lower long-term yields, but they also add uncertainty that can widen spreads. Expect episodic rate moves around headline risk, not a smooth downtrend.

This week’s playbook (Oct 6–Oct 10)

Near-term volatility: With official labor releases delayed, markets will overreact to any substitute indicators (private payrolls, job cuts tallies, weekly claims proxies) and to shutdown resolution headlines. Mortgage rate sheets may swing intraday, with lock timing more sensitive than usual.
Fed expectations: The base case is a pause while data are sparse. If the shutdown winds down and incoming private reports continue to show softer hiring and cooling inflation proxies, markets will price a higher likelihood of additional small cuts or an extended lower policy stance later this year.
MBS spreads: In a headline-driven tape, expect spreads to oscillate. Cleaner data and calmer politics tend to compress spreads; messy news can widen them even if Treasuries rally.

Outlook for mortgage rates

Short term (days to weeks): Elevated rate volatility with a slight downside bias if private labor indicators stay soft and the shutdown resolves. Day-to-day swings are more likely than clear trends.
Medium term (3–6 months): If cooling labor conditions persist and inflation continues to moderate, the Fed’s cautious approach and potential additional easing should nudge mortgage rates lower, though progress may be uneven because of political and geopolitical noise.
Risks to watch: A prolonged shutdown, surprise inflation re-acceleration, or widened geopolitical conflict could lift risk premia, widen MBS spreads, and slow or reverse near-term rate declines despite an easing-leaning Fed.

Plain-English guide for novice readers

Why rates feel jumpy: The usual government jobs report is delayed, so investors are using smaller, more volatile reports and reacting to headlines. That makes mortgage rates change more from day to day.
What this means for you: If the economy keeps cooling and the shutdown ends, rates are more likely to drift down later this year. But don’t expect a straight line—news can cause bumps along the way.

Practical guidance for buyers, sellers, and homeowners

Agents and advisors: Set expectations around volatility and timing. Emphasize that the Fed may hold steady until data return, and that rate moves will be headline-driven this week. Encourage clients to focus on affordability, payment comfort, and life timing rather than perfect market timing.

Active buyers: Lock once you have a signed offer and financing details. In a volatile week, protecting against a sudden upswing can save more than trying to shave an eighth by waiting. Use float-down options where available.

Refinancers: Do a break-even check. If your timeline is flexible and you can tolerate swings, waiting for calmer data could help. If cash-flow relief or certainty matters more, a near-term lock with a float-down can balance risk.

Stay safe and make today great!