Bonds closed Tuesday at session highs, with UMBS 5.0 gaining 16 bps to 97.76 and the 10-year Treasury yield falling to 4.52%. Mortgage rates held steady at 6.68%.

After a familiar midday fade that erased the morning's 11-bp rally, bonds found their footing in the final hour and never let go. UMBS 5.0 opened at 97.72, dipped to 97.59 around noon, then climbed steadily to close at 97.76 — the best level of the day. The 10-year finished at 4.52%, down 4.6 bps from Monday's close.

The session had a few bumps. Existing home sales came in hot — up 3.2% to the highest level since December — but the bond market absorbed the strong economic data without a significant negative reaction. Mid-afternoon war-related headlines sparked brief two-way volatility, though yields never broke above morning highs. The final-hour buying was steady and clean, pushing bonds to the top of the short-term consolidation range that formed in the week and a half since the jobs report. That's a mildly constructive technical development, but the range holds — we haven't broken above it.

For borrowers, the 6.68% rate that arrived with Friday's NFP print appears to be holding as a ceiling for now. Today's MBS gains didn't move the rate needle, but they do set up a better posture heading into Wednesday's CPI release. That's the next real test. A soft print likely pushes yields toward the lower end of this range; a hot number tests the upper end. The "no Fed cuts in 2026" consensus from economists means the path to lower rates runs through inflation data, not the Fed — and CPI tomorrow is first up.

— David Burson, NetRate Mortgage