The average top-tier 30yr fixed mortgage rate rose 0.08% last Friday after the jobs report came in much stronger than expected. Today added another 0.02% of upward movement. Today’s level of 6.68% is the 3rd highest of the past 9 months. Unlike Friday, there were no big-ticket economic reports driving volatility in rate markets. The only arguable cause and effect was seen earlier in the morning surrounding war-related headlines. These actually helped rates start the day lower than they otherwise would have. As the week continues, investors will remain tuned in to war-related developments as well as an important inflation report on Wednesday morning (the Consumer Price Index or “CPI”). 

Bonds Faded in the Afternoon Despite Oil Price Recovery

Oil prices and bond yields started the overnight session higher, but both moved to the lows of the day just after 9:30am. From then on, oil went broadly sideways while bonds sold off gradually. If oil had instead moved higher into the afternoon, we might not care about the bond market weakness. But as it stands, we have bond-specific defensiveness in the afternoon replacing the modicum of bond-specific bullishness we noted in the morning commentary. Not the end of the world, but not ideal.

Market Movement Recap

09:13 AM Sideways to slightly stronger. MBS up 1 tick (.03) and 10yr down half a bp at 4.528

10:40 AM 10yr yields are up 2bps at 4.552 and MBS down 5 ticks (.16). 

03:27 PM MBS down an eighth and 10yr up 2.3bps at 4.555.

Things got a bit worse before they got better over the weekend. 10yr yields were as high as 4.58% in overnight trading, but are now roughly unchanged in early domestic trading. Oil prices mirrored the same movement overnight, but haven’t recovered as much as bond yields. In fact, bonds arguably led the move lower with a gradual rally starting just after 5am ET. Most of the drop in oil prices followed news that Israel agreed to halt today’s attacks in Lebanon. There is no big ticket econ data on tap. War headlines remain relevant as does the bond market’s ongoing range-finding after Friday’s rout.

The announcement follows a leave of absence in which Ginnie Mae President Joe Gormley helped cover the Federal Housing Admission Commissioner’s responsibilities.

The companies now anticipate generating around $14 billion in annual origination volume, making them one of the biggest lenders in the country.

A credit union service organization is buying the division, which includes mortgage services provider QRL, while the seller repositions its home loan business.

President Donald Trump said his administration is still considering a public offering of shares in mortgage giants Fannie Mae and Freddie Mac.

The Bureau of Labor Statistics Friday reported that the economy added 172,000 jobs in May and revised March and April’s employment upward, making the Federal Reserve less likely to cut interest rates to support the labor market in the near term.

At Least It Didn’t Get Much Worse After The Initial Rout

If you had to find something reassuring to say about the bond market today, it would be that there wasn’t much selling after 9am ET. Unfortunately, there was a whole lot of selling in the prior 30 minutes. Try as they might, analysts couldn’t find any obvious holes in the strong picture painted by the jobs report. Stocks got completely destroyed as well–evidence of the jump in Fed rate hike expectations adding to a tech correction that was already underway. An Iran war peace deal remains the biggest market moving prospect on the horizon, but traders will be a bit more interested in labor market data going forward.

Econ Data / Events

Non Farm Payrolls (May)

172K vs 85K f’cast, 115K prev

Participation Rate (May)

61.8% vs — f’cast, 61.8% prev

Unemployment rate mm (May)

4.3% vs 4.3% f’cast, 4.3% prev

Market Movement Recap

08:38 AM Big selling after jobs report. MBS down 3/8ths and 10yr up 5.7bps at 4.533

10:46 AM MBS down 18 ticks (.56) and 10yr up 6.5bps at 4.541

04:27 PM MBS down just over half a point and 10yr up 6.2bps at 4.539

Mortgage applications eased again last week even as borrowing costs moved lower, suggesting that modest rate relief was not enough to bring borrowers back in force. The Mortgage Bankers Association (MBA) reported a 2.5% decrease in total application volume on a seasonally adjusted basis for the week ending May 29. The decline was led by refinance activity, which slipped 2% from the previous week. Refinance demand remained 20% higher than the same period one year ago, however, underscoring that activity is still running above 2025’s pace even as it softens week to week. Purchase demand also pulled back, though the move was more modest. The seasonally adjusted Purchase Index fell 3% week over week and was still 7% above year-ago levels. The average 30-year fixed mortgage rate decreased to 6.57% from 6.65%, but the drop was not enough to spark a meaningful pickup in demand. MBA’s Joel Kan said easing energy prices tied to developments in the Middle East helped push rates slightly lower, though “the retreat in rates… did not lead to an increase in mortgage applications.” Kan added that purchase applications were still ahead of last year’s pace, but were at their slowest weekly level since April, while refinance activity was at its weakest since last June. He also noted that the 30-year fixed rate eased to 6.57%, while the 5-year ARM rate edged higher, reflecting a flattening yield curve.