Bonds closed slightly better — the 10-year finished at 4.705%, down about two basis points, and UMBS 5.5 ended flat at 99.25 — but the average 30-year rate still moved up 0.02% to 6.75%, its third straight daily increase.
The day was a round trip that ended almost exactly where it started. The 10-year tagged 4.748% before the open, ran 4.74% through the 9:17 ET check, then dip buyers showed up after 9:30 and pushed yields lower for the rest of the session: 4.71% by 12:51, 4.706% by 2:37, 4.705% at the close. MBS followed the same path in a narrower band — down an eighth of a point in the morning, back to unchanged by midday, one tick better in the afternoon, flat at 99.25 on the day for the 5.5 coupon. UMBS 6.0 closed 101.33, down three ticks. There was no catalyst behind any of it. The morning's data gave the recovery cover rather than causing it: July housing starts came in at 1.239M against a 1.35M forecast and 1.427M prior — a sizable miss — while building permits beat at 1.443M versus 1.37M, and import prices fell 0.4% against a forecast of +0.1%. Buying started before the 8:30 releases hit.
The gap between "bonds improved" and "rates went up" is a timing artifact, and it's worth understanding because it happens often. Lenders publish rate sheets once a day, usually around 10:00 Eastern, and they only reprice intraday when the bond market moves far enough to justify it. Bonds lost ground Monday, but not enough for the average lender to reprice worse that afternoon — so that weakness got absorbed into this morning's sheets. Today the opposite: bonds improved off the open, but not enough to trigger a mid-session improvement. So the quoted rate reflects yesterday's tape while the bond market reflects today's. Over a week it evens out. On any single day it can look backwards.
For borrowers, 6.75% is a two-basis-point move — nothing that changes a payment in any meaningful way. Current levels sit slightly below the midpoint of the past four weeks, and the past twelve months have been the best stretch for rates since late 2022. The one scheduled event this week is tomorrow: FOMC Meeting Minutes at 2:00 PM Eastern. Nothing else is on the calendar Wednesday, which means the minutes will carry the full weight of whatever direction the market takes into Thursday.
— David Burson, NetRate Mortgage