Bonds carry yesterday's quiet strength into Tuesday morning — the 10-year Treasury sits at 4.660%, down another 3.7 basis points from Monday's close, and MBS prices are higher across the coupon stack. The 30-year fixed holds at 6.78%, unchanged from where it ended yesterday.
Monday ended on one of those days that doesn't get enough credit: no data, no Fed speakers, no auction drama — and bonds still improved from open to close. The 10-year settled at 4.698%, the UMBS stack gained ticks across the board, and the market closed at its best levels of the session. That tone has carried forward into Tuesday. Overnight, Treasuries held and then pushed a little lower as the overnight session moved through Europe. At 4.660%, the 10-year has given back all of last week's backup and returned to the lower end of its August range — though not to new ground, since it traded at 4.639% as recently as August 19. The driver is the same one that moved Monday: oil fell overnight on reports of progress in peace negotiations, and yields followed it down. Mortgage rates haven't reflected the improvement yet because rate sheets price off the prior day's close, not real-time bond levels. If Tuesday's gains hold through the afternoon, Wednesday morning's sheets should show it.
None of this is the real story, though. The real story posts tomorrow at 8:30 AM Eastern: PCE inflation, the Fed's preferred price gauge. July PCE is expected to show continued gradual cooling, but the bond market will price the data before any commentary reaches borrowers. A softer-than-expected number nudges yields lower and could give rates a clear path toward the mid-to-low 6s by September; a hotter number brings the September 16 FOMC meeting into a sharper focus as "on hold" rather than "cutting." This week also carries durable goods (tomorrow alongside PCE), and jobless claims Thursday. Tuesday's own releases — Case-Shiller home prices, FHFA, new home sales and consumer confidence — are second-tier for rates; Case-Shiller came in warmer than expected at 2.1% year-over-year and bonds improved anyway. For borrowers: the week's information flow is weighted heavily to Wednesday, and today's quiet is the market saving its energy for it.
Rates at 6.78% are close enough to 7.0% — which is where a lot of 2023 and 2024 buyers locked — that the math is starting to make sense for borrowers with 7.25% or higher existing rates. Holding through Wednesday for better information costs nothing. Locking today costs the same rate it would have yesterday, and may cost more than it does Thursday.
— David Burson, NetRate Mortgage