Mortgage rates continue enjoying a completely different volatility regime compared to just a few weeks ago.  Back then, it wasn’t a surprise to see the top tier average rate move by more than 0.10% on any given day, nor was it uncommon to see multiple changes during the same day. Fast forward to the present week and the average lender hasn’t strayed from Friday’s levels by more than a few hundredths of a percent. Moreover, the “straying” has been exclusively in a friendly direction.   Today’s installment was the least eventful of the 3 days so far this week.  The bond market worked through its volatility before mortgage lenders set rates for the day and there hasn’t been much movement after that.  As such, the average lender was able to set rates right in line with yesterday and leave them there for the duration. In outright terms, the average top tier 30yr fixed rate is at 6.81%, which can mean most individual rate quotes are going out between 6.625% and 6.875% (for a best case scenario). 6.75% is a less common rate due to the structure of the underlying mortgage bond market (for reasons that are beyond the scope of this article, this basically means that by the time you’re moving down from 6.875, the next lower rate that makes sense to quote is 6.75%, with some limited exceptions). As always, no one should read much into the outright level of a mortgage rate index.  An individual scenario can vary significantly based on several factors.  Instead, focus on the day over day change.

Action Packed Calendar But No Major Action in Bonds

This morning’s economic calendar was certainly the most action-packed of the present week. GDP had something for everyone. The evening news can no doubt harp on the “negative” headline while the financial market immediately understood the impact of a massive surge in imports. Numbers that exclude those accounting impacts make domestic consumption look normal and right in line with last quarter. Inflation was tame, but traders are waiting for future, tariff-affected reports. Treasury issuance was confirmed to hold flat, and the “massive” 6% increase in pending home sales is like a team who won 2 games this year vs 1 game last year saying their won 100% more.  By the end of the day, bonds were almost perfectly unchanged, even after month-end trading brought a big of volatility at 3-4pm ET.

Econ Data / Events

Employment Cost Index

0.9 v 0.9 f’cast, 0.9 prev

GDP

-0.3 vs +0.3 f’cast, 2.4 prev

Core PCE QoQ

3.5 vs 3.3 f’cast, 2.6 prev

GDP Final Sales

-2.5 vs +3.3 prev

Monthly core PCE

0.0 vs 0.1 f’cast, 0.4 prev

Market Movement Recap

09:47 AM Initially weaker following data, but bouncing back on safe-haven buying (stock selling). MBS up 1 tick (0.03) and 10yr down 1.9bps at 4.157

10:22 AM Choppy trading, but generally resolving toward strength.  MBS unchanged and 10yr down 1.4bps at 4.163

12:58 PM Still mostly sideways, with choppy trading dying down.  MBS unchanged and 10yr down 1.2bps at 4.165

03:43 PM A bit stronger after 3pm month-end bond buying.  MBS up 2 ticks (.06) and 10yr down 2.6 bps at 4.15

In terms of line items, Wednesday morning is the week’s most active morning for economic reports. Several of them were potentially important, but the net effect has been muted so far.  In fact, MBS are perfectly unchanged despite an initial sell-off at 8:30am.  Long story short, GDP was a bit better than expected after accounting for the impact of a pre-tariff import surge, and the Q1 inflation data was also higher than expected. This sent bonds into weaker territory at first.  A flat Treasury refunding announcement helped, as did additional digestion of GDP internals (auto purchases had an outsized impact, and spending far outpaced income growth). The 10am monthly reading on PCE inflation showed that March was tame, but much like CPI/PPI 2 weeks ago, March inflation data is being discounted as not reflecting tariff impacts yet.

Wells Fargo’s economics team does an excellent job of getting timely charts out on mornings like this, so we’ll lean more heavily on those than normal, with a big hat tip.
The first chart shows the income vs spending discrepancy mentioned above.

From there, we’ll move to today’s GDP focal point, which was the biggest % drop in next exports in decades

The next two charts show the discrepancy between GDP (distorted by the import imbalance mentioned above) and final sales to domestic purchasers (not distorted).  Bottom line, GDP will get evening news coverage, but it was actually a relative non-event.

The real estate industry is at the forefront of a lobbying blitz to sway Congress to preserve the carried interest tax break that President Donald Trump wants to abolish in a giant tax bill pending in Congress.

The portfolio of offerings includes a buy-before-you-sell product as well as loans geared toward small-business owners, gig workers and real estate investors.

Completed foreclosure sales reach their highest level since the second quarter of 2023, with a 20% quarter-to-quarter increase, Auction.com said.

The company has not traditionally had a large presence in housing finance, but plans for government-related credit modernization have given it a boost.

The subsidiary of Amerant Bank trimmed 58 of its mortgage-related employees, leaving just 20 workers to focus exclusively on Florida-based customers.

It’s now been more than a week since mortgage rates ended the day higher than the previous day.  And we haven’t recovered quite as much lost ground as 10yr Treasury yields, we’re getting pretty close to fully re-entering the narrow range that persisted before the April 2nd tariff announcement.  [thirtyyearmortgagerates] Depending on one’s worldview, tariffs could be a good or bad thing.  Let’s just say they’re a thing that can be good in the right applications and that the initial roll-out of the tariff plan was too much of a good thing.  The early April rate spike was due to fallout from that realization and the recovery has coincided with a more measured approach toward more sustainable trading relationships. Of course there’s much left to be determined and solidified, but whereas the bond market (and thus, rates) was a bit panicked at first, the balance of official communications has afforded traders more confidence.  In addition, most traders assume there will be a near-term economic toll to pay as trade relationships are re-worked, and when markets expect weaker economic data, it puts downward pressure on rates, all other things being equal. Things aren’t exactly equal in this case. Inflation pushes rates higher and there is definitely some fear that tariffs will cause a surge in inflation–temporary or otherwise.  As this push and pull between the economy and inflation is increasingly resolved in the objective data, rates will have a better sense of where they’ll settle out.

Trading Range Restored. Big Data on Deck

Today’s trading was almost a carbon copy of yesterday’s with overnight losses, an AM reversal, and gradual improvement that leveled off in the PM hours. With those gains, 10yr yields made a full round trip back to the lower boundary of the pre-tariff trading range of 4.19-4.34.  That doesn’t mean anything about the future, but it’s an interesting reflection on the recent past. White House comments on Amazon hit stocks early, but everything bounced back even before Amazon clarified its position. Econ data helped bonds hold or add to gains (Confidence and Job Openings). Data gets incrementally more important over the next 3 days, and volatility gets incrementally more likely to pick back up. 

Econ Data / Events

Wholesale Inventories

0.5 vs 0.7 f’cast, 0.3 prev

Job Openings

7.192m vs 7.48m f’cast 7.48m prev

Consumer Confidence

86.0 vs 87.5 f’cast, 92.9 prev

Market Movement Recap

08:49 AM Modestly weaker overnight and little-changed so far this morning.  MBS down an eighth and 10yr up 2.2bps at 4.229

09:50 AM Additional gains.  10yr down 1bp at 4.198 and MBS unchanged.

02:03 PM Holding sideways at best levels.  MBS up an eighth and 10yr down 3.7bps at 4.171