Rates closed at their highest level in just over a week. The 10-year Treasury finished at 4.702%, up 5.6 basis points on the day, and the 30-year fixed moved to 6.76% — four basis points higher than where Wednesday left it.
There was no arc to speak of today. Bonds opened weak, stayed weak, and closed near the day's worst levels. The 10-year was up nearly 5 basis points before the opening bell and finished up 5.6 — a straight line, not a fight. Mortgage-backed securities tracked it the whole way: the 5.5 coupon gave up 25 basis points in the first four minutes of the session and kept sliding into the afternoon, ending roughly a third of a point below Wednesday's close. When the tape moves in one direction from open to close without a single meaningful bounce, it usually means one thing is driving it and nothing is pushing back.
That one thing was oil. Energy prices climbed again on renewed Iran tension, and rising fuel costs feed straight into inflation expectations — which is the single input the bond market cares most about right now. Wednesday's rally, the one built on Treasury expanding its buyback program to $4 billion in the 10-to-30-year range, is essentially gone. Roughly 88% of it was erased by lunchtime. That's worth understanding: a buyback changes who is buying bonds on a given day, not what inflation is going to be. It buys a session. Oil buys a trend. This morning's jobless claims at 206,000 against a 210,000 estimate didn't help either — fewer people filing means a firmer labor market, which gives the Fed one less reason to cut.
For borrowers, the mid-6s are still where the market is, and this week's round trip is a fair picture of what's actually happening: rates are range-bound at the top of that range, and the moves inside it are noise. The next real test is PCE inflation on August 26 — four business days out — then the September jobs report on the 4th and CPI on the 11th, with the FOMC meeting on the 16th. Until one of those lands soft, there's nothing on the schedule with enough weight to break the range.
— David Burson, NetRate Mortgage