Bonds sold off hard for a second straight day. UMBS 6.0 closed at 98.19, down 80 cents, the 10-year yield rose 9.4 basis points to 5.201%, and the top-tier 30-year fixed average jumped 0.19 to 7.45%.

The morning started slightly firmer — UMBS 6.0 at 99.07 and the 10-year at 5.097% at 9:34 AM ET — and turned lower around 10 AM. It never came back: 98.78 by 10:55, 98.53 at 1:44 PM, a session low of 98.14 at 4:29 PM, and a close at 98.19. Along the way the 10-year broke through 5.14%, the ceiling it had been pressing against since Wednesday. Over two sessions UMBS 6.0 is down $1.67, from 99.86 on Tuesday.

This morning and at midday we pointed at oil. It doesn't hold up as the main cause. Oil rose a few dollars, which doesn't explain a move this size, and no data release or headline lined up with the turn — jobless claims (197K vs 201K forecast) came out at 8:30, while bonds were still firmer. What stands out is volume: roughly 3.8 million 10-year futures contracts traded, against 2.8 million in the September 11 selloff and a usual range of 1 to 2 million. That's the market repricing risk, not reacting to a number. The curve shape changed too. On Wednesday the 2-year led, which is a Fed story. Today the 10-year rose about three times as much as the 2-year. That's the long end getting sold.

For borrowers, 7.45% is the number. Wednesday's 7.26% was already the highest since May 2024. Lenders repriced worse more than once today. Freddie Mac's weekly survey moved to 7.03% from 6.95% — its first reading above 7% since January 2025, and a lagging one, since daily rates are already well past it. The live Fed question isn't whether a cut is coming. It's how fast more hikes come after September's. Friday brings durable goods, a minor release. The two that matter are PCE inflation next Wednesday and the jobs report on Friday, October 2.

— David Burson, NetRate Mortgage