Summary:
The October 24, 2025, market report highlights a mixed reaction to CPI data, with bonds initially rallying before retreating due to stronger S&P PMI figures. Core and headline CPI figures came in slightly below forecasts, causing brief optimism before a midday reversal. Mortgage-backed securities (MBS) and 10-year Treasury yields fluctuated but ultimately closed marginally stronger. This volatility underscores the sensitivity of bond markets to inflation data and economic indicators.
What This Means for You:
- Monitor CPI and PMI releases closely—these reports drive bond market volatility, impacting mortgage rates.
- Expect short-term fluctuations—even minor deviations in inflation data can trigger rapid market adjustments.
- Consider locking rates during stability—post-CPI rebounds may offer brief windows for favorable mortgage terms.
- Prepare for Fed policy shifts—persistent inflation trends could influence future rate hike decisions.
Original Post:
Decent Recovery After AM Backtracking
Fri, Oct 24 2025, 4:47 PM
CPI data was a mixed bag for bonds. Top-line numbers fueled a quick rally and digestion of the details brought us back to negative territory (albeit with help from stronger S&P PMI data). Bonds found their footing shortly after 10am at just slightly stronger levels and then stayed mostly sideways through the close. Pretty ho-hum CPI day given all the anticipation…
- m/m CORE CPI (Sep)
- 0.227% vs 0.3% f’cast, 0.3% prev
- m/m Headline CPI (Sep)
- 0.3% vs 0.4% f’cast, 0.4% prev
- y/y CORE CPI (Sep)
- 3.0% vs 3.1% f’cast, 3.1% prev
- y/y Headline CPI (Sep)
- 3.0% vs 3.1% f’cast, 2.9% prev
- m/m SUPERCORE
- m/m CORE CPI (Sep)
09:51 AM
Initially stronger after CPI data, but now turning red after PMI data. MBS unchanged and 10yr up 1.2bps at 4.013
01:51 PM
Crawling back into positive territory. MBS up an eighth and 10yr down 1.2bps at 3.99
04:40 PM
Heading out at just slightly stronger levels with MBS up an eight and 10yr yields down half a bp at 3.997
Extra Information:
Bureau of Labor Statistics CPI Reports – Official source for historical and current inflation data.
Federal Reserve Monetary Policy – Explains how inflation impacts interest rate decisions.
Investopedia: Mortgage-Backed Securities – Breaks down how MBS pricing affects mortgage rates.
People Also Ask About:
- How does CPI affect mortgage rates? Higher CPI often leads to higher rates as the Fed tightens policy to curb inflation.
- What is supercore inflation? A subset of core CPI excluding housing, used to gauge persistent price pressures.
- Why did bonds rally initially after CPI? Lower-than-expected core CPI temporarily eased inflation concerns.
- How do PMI reports influence bonds? Strong PMI suggests economic growth, which can push yields higher.
Expert Opinion:
While the market’s muted reaction to CPI suggests tempered inflation fears, the interplay between PMI and CPI data reveals underlying economic tension. Analysts caution that sustained core inflation above 3% could reignite aggressive Fed action, making real-time monitoring of labor and housing data critical for rate forecasts.
Key Terms:
- Core CPI vs headline inflation
- Mortgage-backed securities (MBS) pricing
- 10-year Treasury yield trends
- Federal Reserve rate hike implications
- Supercore inflation measurement
ORIGINAL SOURCE:
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