The 10-year closed at 4.993%, holding under 5.00% by seven-tenths of a basis point after testing that line all day. UMBS 6.0 finished at 99.69, down 27 cents from Thursday, but 13 cents above the mid-morning low. Lenders ended at 7.20%, one basis point higher.

Bonds sold off Friday without a clean catalyst. UMBS 6.0 opened near 99.75, bottomed at 99.56 by 10:24 a.m. ET, and ground its way back to 99.69 by the close — down 27 cents from Thursday's 99.96. The 10-year traded as high as 5.005% mid-morning and settled at 4.993%, up 6.0 basis points. Nothing on the tape explains the selling; the move came, and then roughly a third of it came back in the afternoon.

The week is the story, not the day. Put Friday's close against Tuesday's — the last session before the Fed announced. Tuesday the 10-year settled at 5.006%, UMBS 6.0 at 99.51, lenders at 7.22%. Friday: 4.993%, 99.69, 7.20%. The Fed raised rates Wednesday and the market spent the rest of the week pricing in another hike or two beyond that, and bonds still finished better than where they stood going into the meeting. A borrower reading only Friday's red numbers would draw the wrong conclusion about the week.

For borrowers, the 30-year at 7.20% moved less than the bond market alone would justify, and the reason is worth knowing: lenders didn't pass through all of Thursday's 61-cent rally, which left them nothing to give back Friday. That cuts both ways — you get a cushion on down days and you wait longer for the benefit on up days. The 10-year's 5.00% line is the number to watch: it has now closed below that level two sessions running after two above it. Next week's data decides whether that holds — Friday resolved nothing.

— David Burson, NetRate Mortgage