colorful beachside apartments

Market Analysis 12.8.25: Rates Are Leaking

Good Monday morning from your Hometown Lender,

Rates are leaking a bit worse as they often do on days right before a Fed meeting. Bonds started the morning off flat but around 9:30am ET started to quickly lose ground (both mortgage bonds and the 10yr Treasury yield).

There is some technical support that could come to our rescue and stop the bleeding but definitely stay alert. Start the day cautiously floating, but if the selloff gets worse be ready to lock.

Although it is unlikely there will be any big moves ahead of Wednesday’s Fed action, if we do see any movement, it will be tomorrow after October’s JOLTS (job openings and labor turnover survey) come out. Although there are a few Treasuries auctions this week, the only thing that has the potential to make a noticeable difference in rates is the Fed meeting and Fed Chair Jerome Powell’s press conference after on Wednesday.

Market analysis from a higher level:

Mortgage & Markets Snapshot (as of mid-morning PT)

  • 10-yr Treasury: ~4.15–4.18% (range today). Trading Economics
  • 30-yr fixed mortgage (daily, MND): ~6.36% (↑ 9 bps vs. Fri). Mortgage News Daily
  • 30-yr fixed (Freddie weekly): 6.19% (week ending Thu, Dec 4). Freddie Mac+1
  • Oil (Brent): ~high-$62s, easing ahead of the Fed; OPEC+ holding output steady for Q1. Reuters+1
  • Gold: firmer on softer USD and cut odds. Reuters

What’s moving rates today

  • Data delays = foggy windshield. The shutdown wiped out October CPI and the October jobs report; November’s ECI is set for Wed, Dec 10, jobs (Nov) on Tue, Dec 16, and CPI (Nov) on Thu, Dec 18—all after this week’s Fed decision. Translation: the FOMC must decide with partial visibility. Reuters+2Bureau of Labor Statistics+2
  • Latest hard data we do have: September core PCE +0.2% m/m, 2.8% y/y (released Friday after the delay), pointing to cooling—but not cold—underlying inflation. Services activity ISM 52.6 shows steady growth with soft employment. Reuters+1
  • Labor hints: Private payrolls -32k (ADP) and jobless claims still low, a “no-hire/no-fire” vibe that keeps recession talk muted but supports gradual easing. Reuters

Market Analysis: Policy & Politics (why it matters to rates)

  • Fed decision (Wed, Dec 10): Futures put ~85–88% odds on a 25 bp cut. Markets will trade the statement, dot plot, and Powell’s tone as much as the cut itself; guidance about early-2026 matters most for the 10-yr and MBS. Reuters+1
  • Shutdown aftermath: Government is funded through Jan 30, 2026 via CR; agencies are sprinting to normalize data releases. Less policy drama = lower “risk premium” in yields—assuming no new fiscal fireworks. Congress.gov+1
  • Energy policy backdrop: With OPEC+ pausing hikes for Q1 and crude subdued, near-term inflation pressure from energy is softer than mid-year—friendly to the disinflation narrative the Fed wants. Reuters+1

Supply Watch (this can nudge the 10-yr/MBS)

  • Treasury auctions: 3-yr today, 10-yr reopen Tue (12/9), 30-yr reopen Thu (12/11). Tails/strong bids can swing MBS intraday.

Market analysis: what it means for borrowers & agents (plain English)

  • If the Fed cuts 25 bps: Short-term rates fall; mortgage rates won’t mirror 1:1, but a dovish path + calmer data could keep the 30-yr near the low-6s. A hawkish press conference or higher 2026 dots could pop the 10-yr and push mortgages back toward mid-6s. Reuters
  • If the Fed surprises and holds: The market has “cut” priced in; a hold likely lifts yields/MBS spreads near-term—lock risk rises into Wednesday afternoon. Reuters

Tactical rate stance (today)

  • Morning bias: Neutral-to-cautious float into the 3-yr; be ready to lock on any weak auction or hawkish Fed headlines tomorrow.
  • Borrower playbook:
  • Buying soon? Consider lock with float-down features.
  • On the fence? Watch Tue 10-yr auction and Wed 11:30–2:30 p.m. ET (statement + presser) for lock decisions.

This week’s market analysis calendar (key risk times)

  • Mon (today): 3-yr auction.
  • Tue (12/9): 10-yr reopen; FOMC Day 1. Federal Reserve
  • Wed (12/10): Fed decision & presser; ECI (Q3) 8:30 a.m. ET. Federal Reserve+1
  • Thu (12/11): 30-yr reopen; weekly claims; no October CPI—November CPI on 12/18. Reuters
  • Next week: Jobs (Nov) 12/16, CPI (Nov) 12/18—both crucial for post-Fed direction.

Stay safe and make today great!