Now it’s a party.
A day after the mortgage rate rally seemed to end, then pulled off a miracle same-day turnaround, they’ve moved even lower still.
The 10-year bond yield nearly slipped back below 5% today as bonds all of a sudden look attractive and tech stocks feel risky.
There was always going to be a point when this happened, especially with sky-high equity valuations, and mortgage rates love it.
All this despite a hot wholesale inflation report, illustrating that bond traders are finally interested in yields at these levels.
Bond Yields Collapse While Economic Data Comes in Hot
Mortgage rates continue to rally and are sharply lower today, building on yesterday’s CPI-fueled turnaround.
At last glance, the 10-year bond yield was down over 10 basis points and at one point as low as 5.03.
Depending on if this move holds, the 30-year fixed mortgage could fall to around 7.375% today.
Rates are still elevated, but given we were closer to 7.625% a week ago, it’s certainly welcome news.
Normally, a wholesale inflation report like the one we got this morning would send bond yields and mortgage rates soaring.
The producer price index (PPI) jumped 1.3% in September, the biggest monthly increase since early 2022, and well above the 0.6% economists were expecting.
Retail sales were also stronger than expected, which like hot inflation isn’t a recipe for lower interest rates either.
Yet the 10-year yield shook it off and fell to its lowest level in about a month.
And that’s after spiking as high as 5.33% following Wednesday’s CPI report, before quickly going the other way.
In other words, the bond market is looking past the hot inflation data for now, and that’s something to pay close attention to.
Is the AI Trade Finally Cracking and Making Mortgage Rates Better in the Process?
I mentioned Tuesday that at a certain point bonds would start to look attractive, and perhaps tech stocks would start to look risky.
With yields above 5% and tech valuations seemingly pricing in perfection, you could see investors look toward bonds and mortgage-backed securities (MBS), as a safer, alternative investment.
Well, it looks like we’re there.
AI-related stocks have been getting hammered, with CoreWeave and chip companies like AMD and Micron moving a lot lower.
There are fears that high interest rates could slow the AI spending boom that’s been propelling the stock market higher and higher.
So money flows out of stocks and into the safety of bonds, which pushes bond yields lower and mortgage rates along with them.
It’s a less-than-ideal path to lower mortgage rates (if your stock portfolio gets crushed), but perhaps better than all the alternatives like higher unemployment.
[Compare different mortgage rates fast with my mortgage rate calculator.]
Mortgage Rates Are Winning, But Home Buyers Might Not Bite
Lower mortgage rates are obviously good news for prospective home buyers.
But a stock market selloff cuts both ways.
When people feel less wealthy because their portfolios are sinking, they tend to hold off on big purchases like a new home.
Especially when mortgage rates remain well above 7% (it’s not like they’re back to 5.99%).
And if the selloff spills over into the job market and wider economy, that’s a different story altogether.
For now, it seems to be mostly just a technical rotation out of expensive tech names and into bonds, which is a pretty normal thing to see after a long run higher.
How Low Can Mortgage Rates Go?
As noted, today we might get back to 7.375% if this holds.
That’d be about 0.25% lower than levels seen just about a week ago.
If the 10-year yield does slip below 5%, mortgage rates could head closer to 7.25%, and perhaps even lower if the rally continues.
It would be huge if somehow rates could get back to a 6-handle before the midterms.
President Trump could highlight that and take a victory lap, despite rates being well above the 3% rates he promised to bring back while campaigning.
But as I always say, nothing moves in a straight line. And lenders always take more time to lower rates than raise them.
In addition, inflation is clearly still a problem. And while the Fed is still expected to hold rates in two weeks’ time, that could change quickly if the data keeps coming in hot.
The bond market is looking past hot inflation for now, which is great news for mortgage rates.
Whether it keeps doing that is the biggest question mark and will be the answer to if we keep moving lower or go higher again.
- Mortgage Rates Plummet Despite Hot Wholesale Inflation Report - October 15, 2026
- Mortgage Rate Winning Streak Comes to an End - October 14, 2026
- Mortgage Rates Move Lower as Oil Prices Cool Ahead of CPI Report - October 13, 2026