Bonds opened the week on firmer ground this morning as Treasury yields retreated and mortgage bond prices moved higher—a reversal from Friday's currency-driven selloff that left the 30-year conventional rate at 6.83%.
The 10-year Treasury yield is down about 4 basis points to 4.69%, and UMBS 5.0 prices are up roughly 6 ticks from Friday's close. The quoted 30-year conventional rate remains at 6.83%—where it finished last week—but that number is a lagged read. Intraday bond direction this morning is positive, and that's the signal that matters for where rates land today.
Friday was rough. Employment costs came in at 0.9% for the second quarter, a tick above the 0.8% forecast, adding to selling pressure that had already built from activity in global currency markets. The 10-year yield hit 4.74% at worst. That came on top of a week where the Fed held rates steady and the subsequent press conference rattled longer-dated Treasuries—even as second-quarter GDP came in at 1.5%, well below the 2.1% expected, and core PCE eased to 3.3% year-over-year in June. The bond market spent most of last week pricing in the tension between softening growth and sticky inflation. This morning's buying suggests some of that tension is being reconsidered as August begins.
For borrowers, 6.83% sits near the high end of where rates have spent 2026. The early morning improvement in bonds hasn't moved quoted rates yet, but if this rally holds through the session, lenders could reprice lower before end of day. For buyers under contract, locking now versus floating is a judgment call that comes down almost entirely to how Friday's jobs report lands.
The labor data arrives quickly. ADP private payrolls hit Wednesday, jobless claims Thursday, and the Bureau of Labor Statistics releases the July employment situation report on Friday, August 7th. If hiring is softer than expected, Treasury yields would fall and mortgage rates would follow. Whatever direction Friday points, the bond market will be watching closely.
— David Burson, NetRate Mortgage