Complete Silence After AM Volatility in Bond Markets
Summary:
Bond markets experienced unusual volatility on December 1, 2025, with a sharp sell-off between 8-10am ET before stabilizing. The movement followed overnight flat trading and occurred despite mixed ISM manufacturing data showing weaker employment numbers but higher prices paid. Analysts debate whether the volatility stemmed from Japan’s central bank news or post-Thanksgiving market adjustments. Yields ultimately returned to pre-holiday ranges, setting the stage for potential reactions to upcoming economic reports.
What This Means for You:
- Mortgage rates may see increased volatility this week as markets digest economic data
- Investors should monitor 10-year Treasury yields (currently at 4.093%) as a key indicator
- Prepare for potential rate lock opportunities if yields retreat from current levels
- Watch for Friday’s jobs report which could trigger the next significant market move
Original Post:
Complete Silence After AM Volatility
Mon, Dec 1 2025, 4:04 PM
Bonds were mostly flat overnight before a sharp sell-off from 8am through 10am ET. After that, momentum went flat again–especially the last 4 hours of trading. No one is still debating whether or not the AM sell-off was due to Japan’s central bank news or a post-holiday return to reality. Yields are back in the pre-Thanksgiving range and ready to respond to this week’s bigger-ticket econ reports.
- ISM Manufacturing Employment (Nov)
- 44.0 vs — f’cast, 46.0 prev
- ISM Manufacturing PMI (Nov)
- 48.2 vs 48.6 f’cast, 48.7 prev
- ISM Mfg Prices Paid (Nov)
- 58.5 vs 59.5 f’cast, 58.0 prev
- ISM Manufacturing Employment (Nov)
09:27 AM
Mostly flat overnight but selling steadily since 8am. MBS down a quarter point and 10yr up 6.9bps at 4.084
11:09 AM
02:34 PM
Steady at weakest levels. MBS still down 9 ticks (.28) and 10yr up 7.9bps at 4.093
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Extra Information:
Bond Market Basics – Explains how bond prices and yields move inversely
Federal Reserve Monetary Policy – Shows how central bank actions affect bond markets
Economic Calendar – Tracks upcoming reports that could impact bond yields
People Also Ask About:
- Why do bond yields rise when prices fall? Bond yields represent the return investors demand, which increases when prices drop to compensate for lower demand.
- How does ISM data affect bonds? Weak ISM data typically pushes yields lower as investors seek safer assets, while strong data can raise yields.
- What causes bond market volatility? Central bank policy changes, economic data surprises, and shifts in inflation expectations are primary drivers.
- How do Treasury yields affect mortgage rates? Mortgage rates generally follow 10-year Treasury yield movements with an added risk premium.
Expert Opinion:
“The morning volatility followed by afternoon stability suggests markets are searching for direction after the holiday break. With key employment data coming Friday, traders appear to be positioning cautiously rather than making bold bets. This could set up significant moves later in the week.” – Fixed Income Strategist, Major Investment Bank
Key Terms:
- bond market volatility December 2025
- 10-year Treasury yield movement
- ISM manufacturing data impact on bonds
- mortgage-backed securities price fluctuations
- post-holiday bond market trends
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