Good Tuesday morning from your Hometown Lender. Here’s today’s market analysis!

Markets were initially nervous before the open yesterday, after President Trump issued a weekend ultimatum demanding Iran reopen the Strait of Hormuz within 48 hours or face the “obliteration” of its power plants. That raised fears of a bond selloff and sharply higher interest rates. However, those concerns eased when Trump unexpectedly backed off at the last minute, giving Iran an additional five days before following through on the threat. That opened the door for bonds to start the day with gains, helping to recover from Friday’s big sell-off.

Trading was choppy on the day and there were both some reprices better and reprices worse, before bonds ended the day about the same as when pricing came out.

Today… Bonds off to a rough start once again, already near Friday’s worst levels. Despite Trump’s claims that talks are underway to end the conflict, attacks continue unabated, and Iran still denies that any talks are happening.

There is no reason today to expect a turnaround after a weak start, and reprice risk on the day is high as bonds could continue to sell off.

Market Analysis – From a higher and better view:

Quick Snapshot (Tuesday, March 24, 2026)

10Y Treasury: ~4.37% this morning (still very headline-sensitive).
MBS (UMBS 30yr 5.5): 100-03, -0-05 on the day (pricing pressure = rate sheet pressure).
Mortgage rates (street-level): MND top-tier 30Y fixed: 6.49% (3/23).
Freddie benchmark: 30Y fixed: 6.22% (3/19 weekly).
Fed funds: held 3.50%–3.75% (3/18), explicitly flagging Middle East uncertainty.
Inflation (latest CPI, Feb): +0.3% MoM / +2.4% YoY headline, +0.2% MoM / +2.5% YoY core.
Gasoline (real-life inflation): national average about $3.96/gal as of 3/23, up roughly ~$0.96 in March.
Current events driver: Iran war + Hormuz disruption risk + Trump “5-day delay” messaging = oil whiplash and bond volatility.

1) Market Analysis – What Hit This Morning (CPI)

No CPI print today. But inflation is still the main character—just wearing a different costume (oil + wages).

Key “inflation-adjacent” data this morning:

Productivity (Q4 2025 revision): productivity revised down to +1.8% SAAR (from 2.8%), while unit labor costs revised up to +4.4% SAAR; hourly compensation revised to +6.3% SAAR.
Business surveys (flash PMI): growth slowed (Composite 51.4), but input prices jumped (prices paid 63.2), and output prices rose—S&P Global warned the price gauges point toward inflation running closer to ~4%.

Narrative you can use:
“Even without CPI on the calendar, today’s story is the same: inflation risk is being reinforced by energy headlines and wage-cost math. That’s why bonds (and mortgage pricing) are jumpy.”

2) Fed Watch

The Fed held at 3.50%–3.75% and explicitly said Middle East developments add uncertainty.
Daly’s message (San Francisco Fed): there’s “no single most-likely path” right now—if the conflict is brief the Fed might “look through” a temporary oil spike, but a prolonged shock forces a tougher tradeoff.

Translation: the Fed wants optionality. Markets hate optionality. Mortgage rates hate what markets hate.

3) Where Mortgage Rates Actually Are

MND (daily, most responsive): 6.49% on 3/23 (down slightly from Friday but still near recent highs).
Freddie (weekly, smoother trend): 6.22% (3/19).
The “why” behind the move higher this month: MND points straight at the Iran war → fuel costs → inflation expectations → policy path repricing.

4) Market Analysis – Housing Market Check

New home sales (big note): the February and March 2026 New Residential Sales releases were rescheduled to May 5, 2026. Translation: less fresh housing data for the market to react to in the near term.
Latest available new home sales (January): 587,000 SAAR, down 17.6% vs December; months’ supply 9.7.
Permits / starts (January residential construction): permits 1,376,000 SAAR (down 5.4% vs Dec); starts 1,487,000; completions 1,527,000.

Takeaway: housing is still moving, but the market’s confidence is being taxed by rate volatility + energy-driven inflation fears.

5) Market Analysis – Political Backdrop & Fed Independence

Two political realities are pricing directly into your rate sheet right now:

War + energy risk = “instant inflation tax.” Reuters notes oil swung hard after Trump messaging, then retraced—while the Strait of Hormuz remains largely closed and missiles continued.
Policy decisions are reacting to markets, and markets are reacting to policy decisions. Reuters’ framing: yields surged early Monday, then eased after Trump’s post—suggesting borrowing costs are becoming a real-time constraint on policy posture.

This is why you’re seeing “calm mornings” turn into “reprice afternoons.”

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

Scenario	What has to happen	10Y direction	30Y mortgage bias
Base case (most likely)	Conflict drags but doesn’t escalate materially; inflation stays sticky	Rangebound ~mid-4s	Low-6s to mid-6s, volatile
Better-rate case	Credible de-escalation + oil cools + price gauges ease	Lower yields	Drift back toward low-6s / upper-5s
Worse-rate case	Sustained energy shock + wage-cost pressure persists	Higher term premium	Mid-6s+ and faster reprices

This is grounded in: oil/war volatility, PMI price gauges, and the Fed’s “stay flexible” stance.

7) Market Analysis – Practical Takeaways

For agents: lead with payment strategy (credits, buydown, product choice). In a headline market, structure beats prediction.
For buyers: have two approved pathways ready (fixed + a backup option like a temporary buydown or ARM where appropriate).
For sellers: volatility doesn’t kill deals—uncertainty does. Clean terms and smart concessions keep buyers moving.