desert home cactus

Market Analysis 12.15.25: Bonds Are Improving

Good Monday AM from your Hometown Lender,

Thank you to Ahmed al-Ahmed. The Australian bystander who thrust himself into a massacre because it was the right thing to do. He saved countless lives during the massacre over the weekend. Today is the first day of Hanukah and last night as we lit the candles, we spoke about the biblical story of Hanukah and all the messages in it. The tragedy in Australia is why as Jews, we celebrate. We will not turn all the darkness into light at one time, but small light matters. I do not use this forum for political or religious purposes but today, I need to speak up.

Bonds are improving a bit early, which should help rates be at least a bit better than Friday. Reprice risk on the day is low, nothing happening today to shake things up. However, tomorrow morning brings the BLS jobs data, which will come out before pricing. Expectations are low, with only 40k new jobs forecast, and unemployment expected to be 4.4%. It isn’t too likely that unemployment will tick higher, but if more jobs were created than expected it could mean worse pricing on morning rate sheets.

Market analysis from a higher vantage point:

Quick snapshot (for the “just give me the gist” crowd)

  • Fed: Last week’s meeting delivered another ¼% cut, taking fed funds to 3.50–3.75%, with a very split committee and a clear “we’re not promising more” tone. Federal Reserve+2Federal Reserve+2
  • Today’s data:
  • Empire State Manufacturing (Dec): fell from +18.7 to -3.9 (forecast was +10) → NY manufacturing slipped back into contraction. Trading Economics+2Investing.com+2
  • NAHB Builder Sentiment (Dec): up to 39 from the high-30s, but 20th straight month below 50 → builders still gloomy, just slightly less so. NAHB+2NAHB+2
  • Bonds: 10-yr Treasury ~4.16–4.17%, a hair lower than Friday, keeping yields near their recent range. TradingView+1
  • Stocks: Wall Street is cautiously green as the last full trading week of 2025 starts, with investors positioning ahead of a huge run of delayed jobs and inflation data. Reuters+3Reuters+3The Times of India+3
  • Mortgage rates (national averages):
  • 30-yr fixed: about 6.29% today on Bankrate/WSJ/Forbes daily reads. Bankrate+3Wall Street Journal+3Forbes+3
  • Freddie Mac weekly (as of 12/11): 6.22% on 30-yr, 5.54% on 15-yr — near the lowest levels of the year. Freddie Mac+1

Baseline today: Sideways-to-slightly-better rates, with markets clearly in “wait for the data dump” mode.

1. Market analysis – what’s moving markets today

Empire State Manufacturing: from party to hangover

The NY Fed’s Empire State Manufacturing Index for December:

  • Dropped from +18.7 in November to -3.9 in December, missing a +10 forecast.
  • Below zero = mild contraction in NY-area manufacturing. Trading Economics+2Investing.com+2
  • Details from the NY Fed:
  • Business activity declined slightly.
  • New orders roughly flat, shipments down modestly.
  • Employment index actually ticked up to 7.3, signaling modest hiring. Federal Reserve Bank of New York+1

Takeaway for a housing/consumer audience:

Manufacturing isn’t falling off a cliff, but the post-Fed-cut “soft landing” story definitely isn’t turning into a boom. Growth is slowing, and that’s exactly what the Fed wants to see to justify the cuts it’s already made.

Builder sentiment: better… but still below break-even

The NAHB/Wells Fargo Housing Market Index (builder confidence):

  • Up 1 point to 39 in December, from the high-30s.
  • Still below 50 for the 20th straight month → that’s nearly two years of “we’re not thrilled.” NAHB+2NAHB+2
  • Sub-indices:
  • Current sales: 42
  • Expected sales (next 6 months): 52
  • Buyer traffic: 26 NAHB

Translation for your agents and clients:

  • Builders see the future a little brighter than the present (expectations > current sales),
  • But today’s traffic is still thin, and costs (rates, labor, materials, insurance, taxes) keep pressure on new-home pricing.

This is a classic “slow thaw, not a spring bloom” signal for new construction.

2. Fed + shutdown = data pile-up week

Where the Fed just landed

From the Dec 10 FOMC meeting:

  • Fed cut again by 0.25%, to 3.50–3.75%, the third cut in 2025. Federal Reserve+1
  • The committee is visibly split; a chunk of policymakers would rather not have cut at all, and one wanted a bigger cut. Reuters+2chicagofed.org+2
  • Projections show:
  • Roughly one more quarter-point of easing by end-2026,
  • Then not much movement after that unless the data really break weaker. Morningstar+2Federal Reserve+2

Chicago Fed President Austan Goolsbee, one of the dissenters, put it bluntly: he’s uneasy about front-loading cuts and wants more proof inflation is tamed before doing more. chicagofed.org+1

So the Fed’s message is basically:

“We cut a bit to respect the cooling economy, but future cuts are data-dependent, not pre-scheduled.”

The 43-day shutdown and the “data logjam”

The longest shutdown in U.S. history (Oct 1–Nov 12, 2025) delayed a lot of the government’s official economic data. ACSM+3Bipartisan Policy Center+3Brookings+3

Now that agencies are catching up:

That’s why today feels calm, but the rest of this week is absolutely not.

3. Bonds & mortgage rates right now

Treasuries

  • 10-yr Treasury yield: around 4.16–4.17% today, down a couple of basis points from Friday. TradingView+2Trading Economics+2
  • Yields are higher than mid-year lows, but still comfortably below the peaks we saw when markets were panicking about “higher for longer” earlier in 2025. FRED+1

The curve is still modestly steepening: short rates are being pulled lower by Fed cuts, while long rates stay sticky because investors want to be paid for:

  • Ongoing inflation risk (still ~3% CPI, not 2%),
  • Heavy Treasury supply,
  • And uncertainty about how “soft” the landing really is. FRED+2Morningstar+2

Mortgage rates

National averages:

  • Freddie Mac PMMS (week ending 12/11):
  • 30-yr fixed: 6.22%
  • 15-yr fixed: 5.54% Freddie Mac+1
  • Daily surveys (today, 12/15):
  • Bankrate / WSJ / Forbes put the 30-yr fixed around 6.29%,
  • 15-yr fixed roughly in the mid-5s. Bankrate+3Wall Street Journal+3Forbes+3
  • Mortgage News Daily’s daily index shows 30-yr fixed oscillating 6.26–6.32% over the last week, near the lowest levels in many months. Mortgage News Daily+1

So headline story for your clients:

“Rates have drifted down into the low-6s and are hovering near the best levels of the year, but they’re not in free-fall — they’re waiting on this week’s jobs and inflation numbers.”

4. Market analysis – looking into 2026: what the forecasters see

Nobody gets the future exactly right, but the cluster of reputable forecasts is pretty tight:

  • Fannie Mae: expects the 30-yr fixed to be around 6.4% at end-2025 and 5.9% at end-2026. Fannie Mae+2Fannie Mae+2
  • MBA (Mortgage Bankers Association): more conservative – sees roughly 6.4% 30-yr lingering into late 2026. LinkedIn+2MBA+2
  • Realtor.com 2026 forecast: expects average 30-yr around 6.3% through 2026. Realtor
  • A Reuters poll of housing experts sees average 30-yr mortgage rates around 6.18% in 2026 and 5.88% in 2027, with home prices up only ~1.4% next year. Reuters

In plain English:

  • Most serious forecasts think we stay roughly in the 6–6.5% band next year,
  • With a shot at high-5s by late 2026 if inflation keeps grinding lower and the Fed can keep nudging rates down.

So the message to your world is:

“We’re probably in the neighborhood of the ‘new normal’ for a while. Think incremental improvement, not a time machine back to 3%.”

5. Market analysis – practical implications for buyers, borrowers & agents

For buyers / homeowners

  • Affordability is still tight, but:
  • Today’s ~6.3% 30-yr is lower than this year’s average and well below the >7% peaks we saw earlier in 2025. Bankrate+2AP News+2
  • Combine that with seller credits and buydowns, and you can often build a payment that feels closer to “5s” even if the headline rate says “6.”
  • Waiting for 4s is likely a losing game. The Fed’s own projections and private-sector forecasts both say 6-ish for a while, with only gradual drift lower. Effective Agents+3Morningstar+3ResiClub+3

Good consumer frame:

“This is a structuring market, not a timing the bottom market.”

For agents & referral partners

Easy talking points you can copy/paste:

  • “We’re starting the last full week of 2025 with 30-year mortgage rates around 6.3%, near the best levels of the year, but markets are holding their breath for this week’s jobs and inflation data.” Bureau of Labor Statistics+3Wall Street Journal+3Bankrate+3
  • “Today’s New York manufacturing data slipped back into negative territory, and builder confidence is still under 50, which tells you the economy is cooling but not crashing.” NAHB+3Investing.com+3TradingView+3
  • “Most forecasts for 2026 point to mortgage rates staying roughly in the 6s, maybe dipping into the high-5s by late 2026 — that means the real win is getting the right structure and negotiating credits / buydowns, not waiting for 3% rates that aren’t on the menu.” Reuters+3ResiClub+3The Truth About Mortgage+3

6. Lock vs float stance — Monday 12/15

You’ll always tailor this to the specific file, but based on today’s setup:

  • Files closing in ≤ 2–3 weeks:
  • Lock bias.
  • We’re near the better end of the recent range in both Treasuries and mortgage rates, and we have a multi-month pile of labor & inflation data later this week that could move markets either way. For clients happy with today’s payment, protecting that win is rational.
  • 30–45 day closings:
  • Cautious float with clear tripwires.
  • If the 10-yr drifts closer to ~4.05–4.10% and lenders improve pricing meaningfully, have a plan in advance to lock instead of playing CPI roulette. Trading Economics+2FRED+2
  • 60+ days / new construction:
  • Look hard at extended locks with float-downs, permanent buydowns, or ARM options if they’re appropriate for the client’s risk tolerance and time horizon. Given the forecasts, the upside scenario is more “slightly lower rates over time” than “huge drop.”

Overall posture today:

Slight locking bias heading into a very data-heavy week. Take improvements when they appear; don’t build your 2026 life plan around unicorn 3% loans.

Stay safe and make today great!