Good Monday afternoon from your Hometown Lender. Here’s today’s market analysis.

Friday was a bad day for rate sheets, showcasing the volatility in bond prices as mortgage bonds went from a morning with some nice gains (about +15bps at 10am ET) to a big reversal of about -32bps to end the day in the red. Mortgage bonds ended the week at their worst levels of the year, down almost -100bps on the week. Rate sheets saw rates jump an average of .250% to .375% on the week, and the 10yr Treasury yield jumped back over the 4.20% technical mark to end the week at 4.29%.

Today bonds are starting the day with some great gains, the 10yr Treasury yield has fallen back down to 4.23, and mortgage bonds have actually recovered all of Friday’s losses and are up about +30bps. The gains can be attributed to a fall in oil prices as the Aframax tanker Karachi sailed through the Strait of Hormuz on Sunday with its tracker on, left unmolested by Iran as the first non-Iranian cargo to have safe passage. Although lenders will be more hesitant to restore all the lost pricing (rates always recover slower than they worsen) we should see rate sheets much better than last week. That said, any sign of violence on tankers will send the optimism packing. There is no way to count on the gains lasting through the day, or seeing more improvement in coming days.

Market Analysis – From a higher and better view:

Market Analysis – Quick Snapshot

The bond market is walking a tightrope today. The Fed’s March 17–18 meeting starts now, with policy expected to stay at 3.50%–3.75% for the moment, while traders have sharply pulled back rate-cut hopes because oil has surged on the Middle East war and inflation risks have crept back into the room like an uninvited raccoon. Mortgage pricing improved a bit Monday from last week’s spike, but it is still meaningfully above the softer levels we saw earlier this month. 

1) Market Analysis – What Hit This Morning

There is no fresh CPI print today. The market is still digesting last week’s big stack of data: February CPI held at 2.4% year over year, core CPI held at 2.5%, and core CPI rose 0.2% month over month. Shelter rose 0.2%, and rent rose just 0.1%, its smallest monthly increase since January 2021. That is a real disinflation breadcrumb, even if it is not yet the whole loaf. 

The other side of the story was less friendly for bonds. January PCE inflation ran 2.8% year over year, with core PCE at 3.1% and core up 0.4% month over month, while Q4 2025 GDP was revised down to 0.7% annualized from a much hotter prior quarter. Translation: inflation is still sticky enough to bother the Fed, while growth is cooling enough to keep recession chatter alive. That is classic “not broken enough to cut, not strong enough to relax” territory. 

Narrative you can use:

“Inflation is no longer sprinting, but it is still jogging faster than the Fed wants, and slower growth is not yet weak enough to force the Fed’s hand.” 

2) Fed Watch

The Fed meeting runs March 17–18, and the market overwhelmingly expects no change to the current 3.50%–3.75% target range. The real event is tomorrow’s statement, dot plot, and Powell press conference. That is where we find out whether the Fed tries to look through the oil shock or starts sounding more openly worried about inflation re-accelerating. 

Markets have dramatically repriced the rest of 2026. Reuters reported that futures now imply only about 24–25 bps of easing by year-end, and Goldman said traders are pricing only about a 41% chance of a September cut. Barclays and Goldman both pushed their own first-cut calls back to September. That is a big mood swing from the earlier “June cut” campfire singalong. 

3) Market Analysis – Where Mortgage Rates Actually Are

The Freddie Mac weekly average for a 30-year fixed was 6.11% as of March 12, up from 6.00% the week before; the 15-year averaged 5.50%. That is the cleanest broad-market benchmark. 

On the day-to-day side, Mortgage News Daily showed a top-tier 30-year fixed average at 6.36% on March 16, down 0.05% from the prior day, with UMBS 30-year 5.0 around 99.20, up 0.31. So yes, rates recovered a bit Monday, but they are still well off the friendlier levels from late February. 

4) Market Analysis – Housing Market Check

Housing is still trying to climb uphill in ski boots. Builder sentiment rose to 38 in March, but that remains below the 50 breakeven line for the 23rd straight month. Nearly two-thirds of builders are still using incentives, and Reuters notes that affordability, labor shortages, and construction costs remain the big drags. 

On actual construction, single-family starts fell 2.8% in January to 935,000, and single-family permits fell 0.9% to 873,000. Overall starts rose because multifamily was stronger, but the single-family signal is still soft. Meanwhile, mortgage demand had shown some life before rates backed up again, with MBA reporting applications up 3.2% for the week ended March 6. 

5) Political Backdrop & Fed Independence

This is where the plot gets extra spicy. On March 16, President Donald Trump said the Fed should hold a “special meeting” and cut rates “right now.” That would already be market-moving theater on its own, but it lands on top of a much bigger independence story around the Fed. 

Reuters also reports that Chair Jerome Powell disclosed a DOJ investigation tied to his congressional statements, called the subpoenas political pressure, and then had a burst of calls with lawmakers. At the same time, Trump has nominated Kevin Warsh to replace Powell when Powell’s term as chair ends on May 15, though that process has hit political friction in the Senate. This matters because bond markets hate uncertainty almost as much as they hate inflation. 

On top of that, Reuters says builder costs are also being affected by Trump’s tariff actions and immigration crackdown, both of which have worsened labor and materials pressures in housing. So the political backdrop is not just noise around the edges; it is feeding directly into construction costs, inflation risk, and rate volatility. 

6) Market Analysis – What This All Means for Rates Going Forward

Right now, mortgage rates are being pulled by two competing magnets. One magnet is slower growth: softer GDP, weaker payrolls, and falling consumer sentiment should normally help bonds. The other magnet is renewed inflation risk: oil, gasoline, war, tariffs, and Fed uncertainty are all pushing the market to delay cuts and demand more yield. For the moment, inflation fear is winning the arm wrestle. 

Here is the practical scenario grid:

Scenario	What needs to happen	Rate impact
Best case	Oil keeps cooling, tomorrow’s PPI/JOLTS are benign, and Powell sounds measured rather than hawkish	Mortgage rates improve modestly
Base case	Fed holds, keeps optionality, and markets accept “higher for longer but not forever”	Rates stay choppy in a fairly tight range
Worse case	Oil re-accelerates, inflation expectations climb, or the Fed sounds more worried about upside inflation	Mortgage rates drift higher again

Tomorrow’s calendar matters: JOLTS for January and February PPI are both due March 18, alongside the Fed decision later that day. 

7) Practical Takeaways

For borrowers, this is still a market where execution matters more than headlines. The broad story is not “rates are crashing” and it is not “everything is broken.” It is a volatile range market with sharp daily moves driven by geopolitics and Fed expectations. That means product choice, lock timing, and realistic payment targets matter more than trying to win a gold medal in rate-market clairvoyance. The bond market has humbled smarter people than all of us before breakfast.

For agents and buyers, the housing takeaway is simpler: affordability is still tight, but incentives are alive, inventory is not collapsing, and the spring market is still happening. Buyers who are financially ready should not freeze just because the headline machine is having a meltdown in public.

8) Lock vs Float

• Lock bias:
• If closing in 0–15 days, I would lean lock. Too much event risk is packed into the next 24 hours between PPI, JOLTS, the Fed statement, and Powell. 
• Middle ground:
• If closing in 15–30 days, I would still lean cautious lock, unless we get clear evidence of cooling oil and a non-hawkish Fed tone. One clean rally does not erase the recent pressure.
• Float bias:
• If closing beyond 30 days, a measured float can make sense, but only with discipline. The path to better rates is still there, yet it probably requires de-escalation abroad and several more tame inflation prints at home. That is possible. It is not promised by the rate fairy.