Treasuries opened the week with a small push higher in yield. The 10 year Treasury is quoted at a 5.290% yield this morning, up about 1.2 basis points, after Friday's weaker jobs report failed to spark the relief rally many borrowers were hoping for. Instead, bonds sold off into the close, and the 10 year is sitting right at its highest level in a year.

Mortgage backed securities are drifting with Treasuries. The UMBS 6.0 coupon is priced at 98.04, down 0.02 so far this morning. The 2s/10s curve is steep at 46.4 basis points, with the 2 year anchored near 4.83% by Fed expectations while longer maturities carry the pressure. That steepening is exactly what keeps mortgage pricing from improving even when the economic data softens.

On the calendar, today is the main event for the week. The S&P Global Services PMI final prints at 9:45 AM ET, followed by ISM Services at 10:00 AM ET. The forecast for ISM Services is near 55, and the prices paid component was 72.6 last month, so any hot reading there would feed the inflation worry that has markets debating whether the Fed's next move is a hike. The rest of the week is light: Fed minutes Wednesday afternoon and jobless claims Thursday. With no big report to rescue bonds, direction will come from the market's own trading, and the next major inflation test is CPI on October 14.

Today's News and Market Impact

The story driving rates is not the jobs number, it is the market's refusal to price relief. Friday's employment report came in softer, yet longer yields rose into the weekend, which tells us investors are focused on inflation and on the possibility of Fed rate hikes rather than on growth. Last Thursday's rally, when the 10 year briefly fell to about 5.22%, was fully reversed. For a borrower, that matters because a good data point is not translating into a better rate sheet. Until yields show a real peak, the risk is skewed toward higher pricing, not lower.

Today's ISM Services report is the one scheduled catalyst. A cooler prices component could give bonds a modest bounce, while a hot print could push the 10 year through the one year high. Fed minutes on Wednesday will be read for any hint about hike timing.

Benchmarks

10-Year Treasury: 5.290% yield ▲ +1.2 bps (price 94.888)

UMBS 6.0 Coupon: 98.04 ▼ -0.02

2s/10s Spread: 46.4 bps

Lock or Float?

15 Days: LOCK. Closing is close and the 10 year is at a one year high. There is no scheduled report this week strong enough to rescue bonds, so protect the pricing you have.

30 Days: LOCK. Fed minutes, CPI on October 14, and the October 28 Fed meeting all land inside this window. The trend in yield is higher, so lock rather than hope for a reversal.

30-45 Days: LOCK. There is no confirmed bottom in yields. A single good data point, like Friday's softer jobs report, has not been enough to turn the market, so lock until a genuine reversal shows up.

45+ Days: LOCK. Even for longer closings, floating means betting on a bottom that has not formed. Lock until yields show a confirmed reversal, not just one good day.

Drew Fisher, NMLS #44061 | Pure Rate Mortgage LLC, NMLS #2578474. This commentary is for educational purposes and is not a commitment to lend or a guarantee of any rate or term.