Good morning!

We are waking up to a market that feels like it’s catching its breath after a dramatic Fed day. The central bank delivered its second rate cut of the year—lowering the benchmark rate to 3.75%–4.00%—but the tone from Chair Powell reminded investors that this may not be the start of a steady cutting cycle. His comment that “a December rate cut is not a foregone conclusion” sent a clear message: the Fed is in pause-and-assess mode. That uncertainty caused a quick selloff in bonds and a mild bump in yields, with the 10-Year Treasury rising to 4.07% this morning. Still, the market backdrop remains constructive for housing and mortgage activity, with inflation cooling, global trade tensions easing, and seasonal demand beginning to reemerge. In other words, while rates popped slightly, the bigger trend remains one of moderation—not reversal.

Treasury & MBS Check

• 10-Year Treasury: 4.07% ⬆ +0.01

• 2-Year Treasury: 3.59% ⬆ +0.01

• 30-Year Treasury: 4.62% ⬆ +0.02

Bond traders are adjusting to Powell’s “drive carefully in the fog” metaphor—meaning the Fed is cautious, but not panicked. The yield curve remains fairly flat, reflecting mixed signals: softer growth but still-sticky inflation.

Mortgage Rates (MND Daily Survey)

Mortgage rates moved higher despite the Fed’s cut, highlighting a key point we often discuss: mortgage pricing reflects future expectations, not just Fed actions. Powell’s hesitation about another cut in December caused markets to quickly reprice the outlook, lifting yields and rate sheets in response.

Why Rates Rose After a Rate Cut

This week’s move is a perfect example of how mortgage rates and Fed rates don’t move in sync. The Fed cut short-term rates, but when Powell said more cuts weren’t guaranteed, bond traders interpreted that as less easing ahead—so longer-term yields like the 10-Year rose. The spike had nothing to do with the rate cut itself and everything to do with expectations for the next one.

Macro Backdrop

The Fed’s move came during a 28-day government shutdown that’s left economic data sparse. Private reports suggest the job market is softening modestly, while inflation remains on a slow glide path lower. Meanwhile, optimism from the Trump–Xi trade meeting in South Korea has helped calm global markets, adding a layer of confidence for risk assets. Stocks are near record highs, and investors are still betting that the Fed will need to cut again if the data stays muted.

What This Means for Rate Sheets

• Near-term: Rates likely hold near current levels for a few days while markets digest the Fed message.

• Mid-term: A sustained move below 4.00% on the 10-Year is possible again in November if growth data weakens or global yields soften.

• Refi watch: Rate volatility is creating windows—brief, but meaningful—for smart refi plays and client check-ins.

Lock/Float Playbook

• Closings in ≤30 days: Lock — volatility could persist into next week.

• 30–45 days out: Float carefully — potential dip opportunity ahead if yields settle back under 4%.

• Refis: Monitor daily; dips could come fast and fade faster.

Talking Points for Clients & Agents

• “The Fed did cut rates yesterday—but that doesn’t automatically lower mortgage rates. In fact, markets often move the opposite way short-term.”

• “The 10-Year Treasury—the key driver of mortgage pricing—is still holding around 4%. If that drops below 4%, we’ll see better rates.”

• “Uncertainty creates opportunity. We’re watching closely for short-term pullbacks to help you lock at the right moment.”

The Bottom Line

The Fed delivered what the market expected, but Powell’s cautious tone took away some of the momentum. Still, we’re in a resilient, stable market—and that’s good news for housing. Inflation continues to cool, trade tensions are easing, and the Fed has officially entered a “wait-and-see” phase rather than a tightening cycle. That balance gives borrowers breathing room and sets up the potential for lower rates once volatility subsides. If the 10-Year can drift back under 4.00% in early November, we could see renewed rate improvement and stronger buyer confidence heading into year-end. Stay positive, stay patient, and use this environment to keep your pre-approved buyers engaged—the next dip could be right around the corner.