While we had a relatively quiet week this week, largely due to the U.S. government government shutdown, I'm getting the sense from my conversations with people in the industry around the nation a sense of cautious optimism mixed with growing uncertainty. Why? Well, markets are grappling with weaker labor data, a prolonged government shutdown, and signs of cooling in the broader economy. Despite lackluster official data, delayed by the now 38-day shutdown, private reports such as those from Challenger, Gray & Christmas and Revelio Labs indicated mounting job cuts and modest employment losses, particularly in the government sector. These reports reinforced expectations that the Federal Reserve could cut rates as early as December, with markets now pricing in a roughly 70 percent chance of a 25-basis point reduction.
Treasury and mortgage-backed securities (MBS) markets reflected this sentiment, with bonds rallying Thursday after the Bank of England hinted at potential easing. The 10-year Treasury yield fell to near 4.09 percent, while lower-coupon MBS outperformed amid modest trading volumes. Mortgage rates, however, edged slightly higher, with Freddie Mac reporting the 30-year fixed rate at 6.22 percent. Investors showed continued preference for safer assets, but activity remained subdued as market participants awaited clearer economic signals and the resumption of federal data releases.
Corporate headlines contributed to the cautious tone, with several major employers (including Amazon, IBM, and UPS) announcing layoffs, underscoring a cooling labor market. Still, private-sector job creation data from ADP showed a modest 42k increase, suggesting resilience in some areas. The divergence between ongoing layoffs and pockets of job growth has fueled debate over whether the economy is merely slowing or at risk of stalling, complicating the Fed’s balancing act between inflation control and employment support.
In the mortgage space, United Wholesale Mortgage (UWM) delivered a bright spot, reporting its strongest quarter since 2021 with $41.7 billion in originations and solid gains in both purchase and refinance activity. CEO Mat Ishbia highlighted record rate-lock days, expanding AI capabilities through its “Mia” virtual loan officer, and plans to bring servicing in-house in early 2026. Meanwhile, aggregate agency MBS issuance rose sharply in October, up more than 12 percent month over month to $120 billion, signaling renewed momentum in lending activity after last year’s slowdown.
Looking a little deeper, there are some trends: mortgage issuance and lender performance showed tentative improvement, while the broader economy displayed mounting signs of fatigue. With the government shutdown halting official labor and housing data, investors leaned heavily on private indicators to gauge the health of the job market and rate trajectory. As year-end approaches, the industry appears to be stabilizing after a challenging stretch, but still navigating various uncertainties.