Monday, December 1, 2025 

What's going on, and why does it matter?
Mortgage bonds opened sharply lower on Monday after a long holiday weekend. The Japanese 10-year government bond hit its highest level since 2008 because it appears that the Bank of Japan is set to hike interest rates in Japan this month. This is driving up global bond yields and interest rates in early trading on Monday. Meanwhile, it's unclear if the Fed will further cut rates in the US due to the lack of economic data resulting from the 43-day government shutdown. Odds of another 0.25% Fed rate are currently 94%, leaving very little margin for error. This means mortgage pricing may worsen if the Fed does not cut short-term rates at its monetary policy meeting next week, or if the Fed indicates a pause in future rate cuts. As for this week's economic data, the normally scheduled monthly jobs report will not be issued due to a lack of data resulting from the government shutdown. However, the delayed Fed-favorite PCE inflation report for September is scheduled for release on Friday, and this may trigger a market reaction.

What should you do about it?
Watch and see if mortgage bonds can remain in positive territory above their 30-day moving average, but be prepared to lock your rate if they break below that level.