Mortgage rates were surprisingly steady on Tuesday with most lenders roughly in line with Monday’s levels. Why surprising?  Because the bond market was noticeably weaker and bonds dictate day to day mortgage rate movement. In Tuesday’s case, we can actually reconcile the steadiness with the timing of bond market movement. Specifically, bonds didn’t lose ground until after the 10am release of the Job Openings data from the Bureau of Labor Statistics. Most mortgage lenders consider bond market levels before 10am when setting rates for the day. The implication is that if bonds are at the same levels tomorrow morning, the average lender would set rates higher. Tomorrow afternoon brings another potential source of volatility in the form of the latest Fed announcement.  The most important thing to understand about tomorrow’s probably Fed rate cut is that it is NOT a mortgage rate cut.  In fact, mortgage rates have been more likely to move higher following recent Fed cuts. Even then, the cut itself is not the news the market is waiting for. Rather, traders are interested to see each Fed member’s rate outlook via the quarterly release of the Fed’s economic projections. In addition, every Fed meeting includes a press conference with the Fed Chair and bonds have often made the biggest moves in response. Bottom line: the rate cut means nothing for mortgage rates. Volatility will come from the 2pm ET dot plot (the chart that shows each Fed members’ rate outlook) and the 2:30pm press conference.

“Seminar ‘How to avoid frauds’ is canceled. Tickets are non-refundable.” Collectively, we don’t want mortgage fraud, right? It’s a non-partisan issue. A grand jury rejected a new mortgage fraud indictment against New York Attorney General Letitia James. Meanwhile, it must be difficult living under a constant microscope, and yesterday a story broke that “Trump’s Own Mortgages Match His Description of Mortgage Fraud.” (Government watchers also noted that Treasury Secretary Scott Bessent announced that he has “divested” himself of North Dakota soybean farmland while President Trump has announced a $12 billion aid package for farmers impacted by trade policies.) Capital markets staff are focused on many things, including combatting fraud since it is illegal and impacts everyone from borrowers to investors. Today’s Capital Markets Wrap, at 3PM ET and presented by Polly, the group addresses many of the general topics facing the industry: the December slowdown in MBS trading, the Fed meeting, 2026 forecasts that hint at brief refinance openings, higher conforming loan limits, record home equity, first-time homebuyer trends, and how new trigger-lead rules may affect recapture strategies next year. One topic unlikely to be covered is artificial intelligence, but don’t worry: In his latest heavily footnoted Mortgage Musing, attorney Brian Levy offers his unique perspective on the role of AI in the mortgage industry and the hard work needed to lower the cost of mortgage loan production. (Sign up for free to get an email from Mortgage Musings whenever Levy posts a new one by subscribing here.) (Today’s podcast can be found here and this week’s are sponsored by Lenders One. Lenders One is dedicated to helping independent mortgage bankers, banks and credit unions reduce costs, improve profitability, and operate competitively in the mortgage industry and within their communities. Hear an interview with Fairwinds Magda DeMauro on how lenders can overcome regulatory and operational barriers, use education, adopt strategic overlays, and embrace emerging tools to offer more flexible, innovative credit decisions that help better support borrowers seeking new or alternative paths to homeownership.)

Tuesday is a fairly straightforward session for the bond market.  By now, we assume most of the pre-Fed positioning would be out of the way, and we know there was a decent amount of anticipation for the JOLTS data (job openings and labor turnover survey). True to form, volume spiked to its highest levels since the 11/20 delayed release of the jobs report. Unfortunately for bonds, job openings came in higher.  The saving grace is that the “quits” rate fell to the lowest levels of the cycle (lower quits = good for rates, all else equal). The net effect is still a sell-off in bonds, but not as forceful a sell-off as it could have been without the mixed signals.

Treasury yields climbed to the highest in more than two months, following losses in most global government-bond markets, ahead of a Federal Reserve interest-rate decision that may alter expectations for monetary policy in 2026.

The provider of actuarial-related services is bringing a company that provides mortgage servicing rights analytics and risk management into the fold.

Hildene, which partners with Crosscountry Mortgage for non-QM securitizations, is doing this deal as part of its buy of an annuity provider, SILAC.

In oral arguments held Monday morning, a majority of Supreme Court justices seemed poised to overrule a 90-year-old precedent validating multimember independent commissions, but it remains uncertain what limits — if any — the court may impose on the president’s removal powers.

The all-stock acquisition of Mountain Commerce Bancorp in Knoxville marks the Arkansas-based company’s first M&A foray since 2022.

Pre Fed Jitters? Not Exactly

Both stocks and bonds began to swoon moments after this morning’s 9:30am NYSE open. That sort of pervasive selling is often seen when the Fed’s rate cut outlook is deteriorating. With the Fed on deck Wednesday, it would be easy to slap “pre-Fed jitters” on the label of today’s sell-off and call it good.  But Fed Funds Futures don’t corroborate that narrative. In fact, nothing does (at least not when it comes to obvious data/events/news).  We’re left to lean on “elevated random volatility between Thanksgiving and New Years.” It’s our least favorite explanation, but in today’s case, it’s also the least stupid one we’ve seen.

Market Movement Recap

09:39 AM A hair weaker overnight and sideways so far.  MBS down 3 ticks (.09) and 10yr up 1.2bps at 4.149

01:31 PM drifting sideways near weakest levels. MBS down a quarter point and 10yr up 3.5bps at 4.172

03:30 PM Off the weakest levels, but not much. MBS down 7 ticks (.22) and 10yr up 3 bps at 4.167

Both stocks and bonds lost ground on Monday. This pushed mortgage rates up near their highest levels in just over 3 months (because mortgages are based on bond prices).  To put the 3-month highs in perspective, today’s rates are right in line with those seen 2 weeks ago. [thirtyyearmortgagerates] When we see a larger-than-average shift in rates, it’s often attributable to an obvious catalyst. These can be things like economic reports, comments from the Fed, or geopolitical developments.  In today’s case, there are no obvious scapegoats. That said, given the proximity of the next Fed announcement, “pre-Fed jitters” will likely be a popular guess.  Ultimately, between Thanksgiving and New Years, we’re simply more likely to see random volatility without a clear root cause. Clear connections will be more likely over the next 2 days due to Tuesday’s economic data and Wednesday’s Fed announcement.