The 30-year conventional closed at 6.79%, essentially flat on the day, as MBS round-tripped the midday selloff to finish right where it opened — UMBS 5.0 back at 96.75 after dipping to the 96.00 area at lunch. The 10-year Treasury ticked up to 4.69%.

The day was a full loop. Bonds opened firm on peace-deal headlines, faded through the midday session as pre-CPI selling took over, then clawed all of it back into the close. That recovery is the tell: with UMBS 5.0 ending exactly where it started, traders were unwilling to press the market lower into the single most important data point on the calendar. The 10-year drifting up a couple basis points to 4.69% is a spread-and-supply story more than a conviction move — nobody wants a directional position the night before July inflation prints. On the day, MBS is down about 13 ticks versus yesterday's close, but the intraday recovery matters more than the day-over-day number heading into Wednesday.

For borrowers, 6.79% is where the market settled, and the entire complexion of the rate landscape resets tomorrow morning. July CPI at 8:30 AM ET is the whole ballgame — a soft print re-opens the September rate-cut narrative and can pull the 30-year toward 6.6x, while a hot number (anything approaching June's 3.3% core) pushes rates higher and takes September off the table. FOMC minutes from the July meeting follow Wednesday afternoon. If you were floating a lock through today, the risk is now binary and it resolves before the bell. Make the call with clear eyes: locking captures a known 6.79%; floating is a straight bet that inflation cooperates.

— David Burson, NetRate Mortgage