You are currently viewing Market Analysis 11.5.25: Rates Under Pressure

Market Analysis 11.5.25: Rates Under Pressure

Good morning on this best day of the week Wednesday, from your Hometown Lender,

Rates are under pressure this am after the two released reports (ISM and ADP Payrolls) both came in a bit stronger than expected. Neither are typically market movers but in the vacuum of no other data, the reactions are outsized.

With the stronger data, the odds of a fed cut in December continues to drop which is supporting the dollar. A good thing if you are planning to travel over the holidays.

A little higher view market analysis:

1. Quick market analysis snapshot: where rates sit today

  • 10-year Treasury:
  • The 10-year is trading around 4.14–4.15% today, up from ~4.09% yesterday and just above where it closed Friday. Investing.com+1
  • National mortgage averages:
  • Freddie Mac (week of 10/30): 30-yr fixed 6.17%, 15-yr 5.41% — 4th straight weekly decline and the lowest 30-yr average in over a year. Freddie Mac+2freddiemac.gcs-web.com+2
  • Daily trackers today: most averages show 30-yr fixed in the low-6s — roughly 6.1–6.3% — with small day-to-day wiggles. Yahoo Finance+1

Borrower translation:

“Rates are still hovering in the low 6s, which is the best stretch we’ve had in over a year, even though they’ve bounced a bit as markets digest new data.”

2. Today’s big data: services side of the economy market analysis

ISM Services PMI (October, released today)

  • The ISM non-manufacturing PMI jumped to 52.4 from 50.0 in September, beating expectations for ~50.7. Investing.com+2FXStreet+2
  • Anything above 50 = expansion. Since services are two-thirds+ of U.S. GDP, this tells us the services side is still growing, even as manufacturing has been shrinking (October manufacturing PMI was 48.7, eighth month below 50). Trading Economics+1

Rate impact:

  • Stronger-than-feared services = less “hard landing” fear → nudges the 10-yr yield higher (hence today’s move toward 4.15%) and puts mild upward pressure on mortgage pricing. Investing.com+1

“The factory side of the economy is soft, but services are still growing. That’s why rates haven’t plunged — we’re in a slowing, not crashing, environment.”

3. Political backdrop: shutdown sets a record

Government shutdown: Day 36 (longest in U.S. history)

  • As of today, the 2025 shutdown is officially the longest on record, now 36 days and counting. Courier Journal+2FOX 5 DC+2
  • The Senate has repeatedly failed to pass a funding bill; pressure is building as federal workers, TSA, law enforcement, and military personnel miss paychecks, and programs like SNAP and Head Start are strained. The Guardian+1
  • Analysts estimate the shutdown could shave tens of billions off GDP if it persists, and several key reports (including the monthly jobs report) are delayed, forcing markets to lean on models and private data. Kiplinger+2Morningstar+2

Why this matters for rates:

  • Growth drag: Less federal spending + uncertainty → slower growth, which is bond-friendly and tends to cap yields.
  • Data fog: Missing official data → more guesswork → higher day-to-day volatility in rates when any new piece of information hits. Kiplinger+2Morningstar+2

“The shutdown is actually putting gentle downward pressure on long-term rates, but it also makes markets jumpier because we’re flying with fewer instruments.”

4. Market Analysis: Recap of this week’s other key pieces

Manufacturing (earlier in the week)

  • ISM Manufacturing PMI (Oct): 48.7 (from 49.1), below forecasts and the 8th straight month in contraction. Trading Economics+1
  • ISM notes weaker new orders and ongoing tariff-related cost pressures. The Guardian+1

→ This supports the “slower growth” side of the story, which is generally good for rates.

Mortgage rate & demand backdrop

  • Freddie Mac PMMS:
  • 30-yr fell to 6.17% as of 10/30 — down 0.15% over the last month, and from 6.72% a year ago. Freddie Mac+2Fox Business+2

Once rates printed a 6-handle, both buyers and existing homeowners started kicking tires again.

Fed recap (from last week, still driving expectations)

  • Fed cut 0.25% on Oct 29, taking the funds rate to 3.75–4.00%, and signaled rising concern about employment, with inflation slowly drifting toward 3%.
  • Powell made clear December is not an automatic cut; future moves depend on how jobs and inflation evolve.

That’s why markets are pricing more cuts over time, but with some hesitation — which is exactly the vibe you see in a 10-year stuck around 4.0–4.2%.

5. Where rates are likely headed (next 2–4 weeks)

Think in lanes:

Lane 1 – Base case: sideways, soft bias

Implication:

  • 10-yr ~3.9–4.2%
  • Retail 30-yr fixed in the low-6s, with high-5s possible via points/strong files.

Lane 2 – Upside-rate risk: “still too strong”

  • Services remain hot, upcoming claims & Fed speeches lean against further cuts.
  • Any inflation surprise (tariffs/energy) creeps back into headlines. The Guardian+1

Implication:

  • 10-yr pushes toward 4.25–4.35%,
  • Lender pricing worsens ~0.125–0.25%.

Lane 3 – Downside-rate surprise: growth or shutdown scare

Implication:

  • Flight to safety → 10-yr breaks below ~3.9%,
  • Lenders sharpen rates, but intraday reprices can come and go quickly.

Right now we’re basically straddling Lane 1, with markets nervously eyeing Lanes 2 and 3.

6. Market Analysis: Bullet points

“Mortgage rates are currently in the low 6s, which is the best we’ve seen in over a year. That’s thanks to a combination of slower manufacturing, a Fed that has started cutting rates, and a record-long government shutdown that’s weighing on parts of the economy.

At the same time, the services side of the economy is still growing, and inflation is drifting down but not gone. That’s why rates haven’t collapsed, but they also haven’t shot back into the 7s. We’re in a ‘slow-but-still-moving’ environment.”

7. Practical lock/float guidance

All about payment and breakeven, not chasing a magic “5-something” headline. If someone moved from high-6s/7s into low-6s with modest cost, they’ve already improved. A future cut could open a second, math-driven refi, not a FOMO one.

Closing in ≤30 days:

Lean lock bias. You’re inside a noisy window: record shutdown, new services data, weekly claims, and hyper-sensitive markets. A small bump in yields can hurt more than a tiny improvement helps.

Closing in 45–90 days:

Float with rules, not vibes. For example:

“If the 10-yr breaks above ~4.25%, we lock.” Investing.com

“If pricing worsens by ~0.25% in cost, we lock.”

That turns rate-watching into a plan you can document in your email recaps.

Refis:

  • All about payment and breakeven, not chasing a magic “5-something” headline. If someone moved from high-6s/7s into low-6s with modest cost, they’ve already improved. A future cut could open a second, math-driven refi, not a FOMO one.

Stay safe and make today great!