This is Matt Graham with the MBS Live Market Update. Mortgage rates ended last week at their lowest levels since September 23rd, which extends an improvement that had started to look a bit indecisive. Renewed trouble in the tech sector provided the biggest push, with Thursday and Friday bringing a combined drop of zero point zero eight percent for the average thirty-year fixed rate. Last week, we talked about further improvement in rates depending heavily on tech troubles sticking around. A brief recovery in tech sentiment put that idea to the test last week. Stocks bounced and borrowing costs eased for some of the companies at the center of the AI-related concerns, such as CoreWeave. Thankfully, mortgage rates in the bond market were able to hold fairly steady, only losing ground modestly as the tech sector corrected, perhaps because the tech sector was only correcting modestly. With few surprises in the econ data, investors focused on tech and also, to some extent, whether Fed Chair Warsh would offer any new clues about future rate hikes. Now, Fed announcements are always a potential source of volatility, and we never wanna discount them on that fact. But last week’s had no major impact. First off, we already knew the Fed would almost certainly keep rates on hold, and there were no surprises there secondly, it remained to be seen if Fed Chair Warsh could really offer any surprises in the press conference. That indeed was the only potential market mover on the day, and his comments did suggest a more wait and see approach than the market was perhaps expecting. But that only created a little bit of volatility in Fed funds futures. All in all, there was really no reaction in mortgage rates or the bond market. Rates were slightly higher heading into the Fed, and they didn’t change in any appreciable way after that. Ultimately, it was the tech sector yet again that provided the biggest push. We just had to wait until Thursday. There was heavy selling in the Nasdaq throughout the day, and at four PM, Intel and Amazon released earnings, which absolutely crushed Intel stock on Thursday afternoon. That brought 10-year yields below four point nine percent by Friday morning, and mortgage rates started the day at their lowest levels in more than a month. There was some resistance to the additional gains in the bond market on Friday, though, even with more potentially friendly cues from the weaker tech sector. That could have something to do with month-end trading constraints, whereby certain accounts are required to hold a certain mix of bonds by the close of business. But there again, it wasn’t any sort of panicked selling in the bond market, just a little bit of unwillingness to follow tech stocks weaker. Ultimately, there was enough help from the tech sector for the happy ending. 10-year yields rose from four point nine to four point nine six for most of the day. Then reports came out suggesting Anthropic was unlikely to receive an investment-grade rating after its planned IPO. That would mean higher borrowing costs for a company that plays a major role in the AI build-out, and that helped bonds recover most of their earlier losses almost immediately, and they ultimately made it back under four point nine one percent by four PM. Why did that matter? Higher borrowing costs could limit how much money these companies, Anthropic and others, can raise and spend. That matters for rates in two ways. First off, less borrowing means fewer corporate bonds competing for investors’ dollars. That’s definitely been something that’s put upward pressure on rates this year, and less spending could obviously mean slower economic growth. Both possibilities can help bring Treasury yields and mortgage rates lower for obvious reasons. But that connection isn’t one for one and it’s not automatic, and at several points last week, bonds were again reluctant to follow tech stocks move for move. Friday was largely about protecting Thursday’s late improvement even as stocks fell further. A bad day for the Nasdaq, in other words, doesn’t necessarily guarantee an equally good day for mortgage rates. But in general, the bond market is tuned in to the tech sector for sure. With month-end out of the way, we’re seeing some improvement this morning that we otherwise would have expected on Friday. Ten-year yields are back under four point nine percent, and mortgage rates are starting the day right in line with Friday’s latest levels. As for the rest of the week, tech jitters remain the most useful clue about near-term rate momentum. If concerns about AI spending and financing deepen, that could continue supporting lower rates. Economic reports showing slower growth or easing inflation would give that improvement a firmer foundation. But we’re really more focused on next week’s inflation data based on the fact that the Fed said it was very focused on its inflation mandate, implying that the jobs report may not be as important as CPI this month. That’s gonna do it for this week. Back to you.
Matt Graham, Founder and CEO, MBS Live
Matt began as an originator in 2002. He fell in love with the idea of following MBS in real-time but felt that existing products were only scratching the surface. Thus was born MBS Live in 2007, the first-of-its-kind platform with real-time market data/analysis, and live chat with analysts, traders, and originators around the country. He is currently the Founder and CEO of MBS Live!
He’s been covering bond/mortgage markets, writing commentary, alerts, and chatting with the live community every business hour of every business day ever since.
Matt also serves as the Chief of Operations for mortgagenewsdaily.com, where he is one of the industry’s most respected mortgage rate experts, frequently quoted in the media. Mortgage News Daily’s rate index is used as the definitive resource on day-to-day mortgage rate averages.
He lives in the Pacific Northwest with his wife and son where he enjoys skiing, fishing, coaching youth sports, playing the guitar, and more DIY projects/hobbies than he’d care to admit.