The 10-year Treasury closed at 5.006% and UMBS 5.5 at 97.09, down a nickel on the day — the smallest loss in a week. But the average 30-year rate moved up to 7.22%, the sixth straight daily increase and the highest since January 2025.
Tuesday was the first session in six that did not get worse in a hurry. The 10-year opened at 5.001%, ran to 5.006% just after the 1:00 PM Eastern 20-year Treasury auction, came back to 5.00% by mid-afternoon, and settled at 5.006% — up 1.4 basis points from Monday's close. UMBS 5.5 lost five cents to 97.09. UMBS 6.0 lost twenty cents to 99.51, about nine cents above where it traded around 1:30. Set that against Monday, when the 5.5 dropped twenty cents, and against last week, when the losses arrived every single day.
What stands out is where the buying showed up. Every attempt to push the 10-year above 5% during U.S. trading hours ran into a bid. That is worth noticing because oil went over $106 today, and higher oil is supposed to push yields up through the inflation channel — not leave them pinned under a round number. When that transmission fails for a full session, the usual explanation is that somebody is willing to own a 5% risk-free yield regardless of what the inflation headline says. It might be seller exhaustion in the long end. It might be nothing more than value buyers at a round number. One session is not a trend, and tomorrow afternoon can erase the read entirely. The 20-year auction was the day's only real catalyst and it cleared without dislocation — MBS gave up a tick into it and had it back by 3:13.
For borrowers, the number that matters is 7.22%. That is six consecutive daily increases, the highest average 30-year rate since January 2025, and 33 basis points in six days — the most abrupt run since October 2024. The FOMC statement lands at 2:00 PM Eastern tomorrow with Chair Warsh's press conference at 2:30, and markets are heavily positioned for a hike. The live debate in the committee is hold versus hike, not hold versus cut. Worth keeping straight: a Fed Funds move does not mechanically set mortgage rates. The two have gone opposite directions several times in the last six weeks, and today's curve is another example — the 2-year rose less than a basis point while the 10-year rose more than two. Thursday morning is the first full session on the other side of it.
— David Burson, NetRate Mortgage