UMBS 5.0 returns from the long weekend with a 13-tick gain to 98.22, the 10-year Treasury at 4.464%, and the 30-year conventional rate holding at 6.60% as the bond market reopens its first full trading session after the Independence Day break.

The June jobs report did the work last week. Payrolls came in at 57,000 — roughly a third of what economists had forecast — and labor force participation dropped to its lowest level in fifty years outside the pandemic. Those numbers cleared on Thursday's shortened session and bonds held the gains through the weekend. UMBS finishing this morning 13 ticks above Thursday's close means the market didn't give anything back in thin holiday trading. That's worth noting. Big moves built on soft data often get tested in the first full session after the holiday. The fact that they haven't suggests the market believes the jobs weakness is real, not noise.

What hasn't resolved is the policy picture. The incoming Fed chair has been hawkish on inflation, and the short end of the Treasury curve is reflecting that — the 6-month yield rose through 4% last week, even as the 10-year pulled lower. That split (short yields up, long yields down) is the market saying: "We expect the Fed to stay tight or tighten further, and we think that slows the economy." For mortgage rates, the long end is what moves the needle, and the long end moved in borrowers' favor last week. But the tension at the short end means the Fed's next move is genuinely uncertain in a way it wasn't three months ago.

For borrowers, 6.60% is a real number on a lendable Monday morning. The next data catalyst is mid-July CPI. If inflation prints hot, last week's gains are at risk. If it confirms the jobs report softness, rates have room to continue lower. There's nothing on today's calendar that changes the picture; the week is quiet until Thursday. That gives borrowers a clean window to run the math without waiting on a data event.

— David Burson, NetRate Mortgage