Market Overview

Good morning Team!

The bond market is starting midweek on a quiet but encouraging note, as Treasury yields drift slightly lower while investors digest the latest trade headlines and earnings reports. After a volatile few weeks driven by tariffs, government shutdown uncertainty, and global tension, today’s tone feels calmer — a reminder that markets often pause before making their next move. The 10-year Treasury yield, a key benchmark for mortgage rates, is holding right near 4.01%, a level that’s become an anchor in recent sessions. This modest pullback signals cautious optimism that inflation is continuing to cool beneath the surface and that the Federal Reserve’s next move could lean toward easing later this month with another cut.

At the same time, the equity markets are seeing a cautious rebound. Strong earnings from big banks and major European firms have brought back a bit of confidence to global markets, even as investors continue to monitor developments between Washington and Beijing. With gold breaking above $4,200 and the dollar easing slightly, the overall tone leans “risk-on,” though investors remain alert to any new trade threats from either side.

Treasury & MBS Check

Bond yields are inching lower across the curve, with the 10-year down fractionally and the long bond following suit. The 2-year remains steady, suggesting traders are still pricing in a 95% probability of a quarter-point Fed rate cut at the October 29 meeting.

Mortgage Rates (MND Daily Survey)

Mortgage rates continue to hold multi-week lows, marking the best levels since mid-September. The bond market’s stability since Friday’s rally has allowed lenders to maintain — or slightly improve — pricing. The range remains narrow, but sentiment is gradually shifting toward a more constructive outlook as rate volatility eases.

Why Bonds Are Quiet

The ongoing government shutdown, now in its 15th day, is limiting new economic data — leaving markets “flying blind,” as Deutsche Bank put it. The September Consumer Price Index (CPI) report has been delayed until October 24, though it will still be released even if the shutdown continues because it’s used in Social Security calculations. Until then, traders are relying on remarks from Fed officials, bank earnings, and global cues to guide expectations.

Yesterday’s dovish tone from Chair Jerome Powell, noting “downside risks to employment,” helped solidify the market’s conviction that rate cuts are coming soon. Add in softer commodity prices and cooling manufacturing data, and you get a bond market that’s stable — but watchful.

What This Means for Rate Sheets

• Below 4.00% 10Y: Expect lenders to reprice slightly better.

• Above 4.10–4.15% 10Y: Pricing could worsen by 0.125–0.25%.

• MBS spreads are holding firm, with investors showing steady demand for mortgage paper even amid light volume.

Overall, today’s environment remains supportive for locking, but a decisive break below 4.00% on the 10-year could open the door to further improvement in rate sheets.

Lock/Float Playbook

• Loans closing in ≤30 days:  Lock

• Loans closing in 30–45+ days: Could advise clients to Float, but monitor the 10 year support at 4.00%

• Refi pass-throughs remain modest, but purchase locks are seeing better rebate levels this week.

Talking Points for Clients & Agents

• “Mortgage rates are holding their best levels in nearly a month — a great window for buyers to lock before Fed volatility returns.”

• “The 10-year Treasury yield is hovering right at 4%, a key level the bond market treats as support — if it breaks lower, we could see even better rate pricing.”

• “Markets are stabilizing as the Fed prepares to cut rates, but trade tensions and the shutdown could still jolt sentiment, so acting early remains wise.”

Quick Coaching Tip

Script for Realtors/Clients:

“I know you’re hearing a lot about rate cuts and trade headlines. What matters for you is that rates are near a 4-week low and buyers are stepping back in. Even a small drop in yield can translate to a meaningful savings on monthly payments — so it’s a great time to get your pre-approval refreshed and take advantage of the market calm.”

Today’s Calendar

• MBA Mortgage Applications

• Empire Manufacturing Index

• Fed Beige Book

• Earnings: Bank of America, Morgan Stanley, PNC, Citizens Financial, Progressive, Abbott Labs, Prologis, United Airlines

Next Catalyst: Retail Sales and PPI data on Thursday, followed by Housing Starts Friday.

Bottom Line

The 10-year Treasury sitting just above 4% is keeping mortgage rates anchored near their monthly lows. A quiet bond market, strong bank earnings, and Powell’s dovish remarks are creating a window of stability — one that borrowers should take advantage of while it lasts. Stay focused, stay positive, and remember: momentum in calm markets often favors the proactive loan officer.