Bonds made a full round trip Tuesday. UMBS 6.0 sank to 97.77 by early afternoon, then recovered to close at 98.19, down just one cent. The 10-year finished at 5.237%, up 0.3 basis points. The average 30-year fixed still rose to 7.58%.

The morning selling had no news behind it. Oil fell, and bonds sold anyway, at the futures open and again at the stock market open, which points to quarter-end positioning more than anything in the data. At the worst of it the 10-year touched about 5.29%, the highest since 2007, and mortgage bonds were down almost half a point. The turn came at 2:00 PM ET, when New York Fed President John Williams said he sees no need for urgency after September's rate hike. Williams carries more weight than most Fed speakers, and the short end of the curve rallied first. Mortgage bonds climbed three-eighths of a point off the lows and closed back where they started. Today's data leaned soft on the labor and consumer side. Consumer confidence came in at 81.9 against 89.2 expected, and JOLTS job openings came in at 7.08 million against 7.23 million, but neither drove the day.

For borrowers, the flat close doesn't mean flat rate sheets. The 7.58% average was set before the late recovery, and lenders who repriced worse at midday won't all reprice back. That's the highest average since November 2023. The Fed debate is still hold versus hike, and today Williams leaned toward holding. The real tests come next. PCE inflation lands Wednesday and the September jobs report on Friday, both at 8:30 AM ET. After a day this volatile with no data behind it, those two reports can move rates a lot in either direction.

— David Burson, NetRate Mortgage