Good Thursday morning from your Hometown Lender,
Yesterday saw bonds start out with some small gains, which was a good sign. However, by day’s end, the gains were gone and bonds ended the day worse. Rates this morning are worse, as bonds start the day with losses, but are showing some signs of recovery.
Although mortgage bonds aren’t taking the same losses we are seeing in Treasuries, the best we’re hoping for here is to recover the losses. We should continue to expect volatility and remember that tomorrow morning will bring the BLS jobs data.
And although almost all market action is based on oil pricing and activities in the Middle East, a strong report tomorrow could be icing on the cake for rates to move higher.
Market Analysis – From a higher and better view:
Market Analysis – Quick Snapshot
- 10-year Treasury: ~4.13% (yields popped as energy/geopolitics injected fresh inflation risk).
- Mortgage rates (daily pulse): 30-yr fixed ~6.07% on MND’s index.
- Mortgage rates (weekly benchmark): Freddie Mac 30-yr 5.98% (latest PMMS), 15-yr 5.44%.
- Today’s big market mover: Oil up >3% on escalating Iran conflict / Strait of Hormuz disruptions (inflation wildcard).
- Stocks: Pressure today as the energy shock + geopolitics hit risk appetite.
- Labor market early read: Jobless claims 213K (steady), layoffs sharply lower per Challenger.
1) Market Analysis – What Hit This Morning
A) Weekly Jobless Claims (8:30am ET)
- Initial claims: 213,000 (unchanged).
- Continuing claims: ~1.868M (up).
B) “Current events” that actually moved markets
- Energy shock: Oil jumped again as the Iran conflict widened and shipping risk around Hormuz spiked—this is the kind of headline that can overpower “nice, boring” economic data.
Narrative you can use:
“Today is a reminder that mortgage rates don’t just trade CPI—they trade the world. A calm jobs number helps, but an oil spike can still bully yields higher.”
2) Fed Watch
- Beige Book (released yesterday): The Fed’s anecdotal read points to modest growth, stable-ish employment, and ongoing price pressures, with pockets of strain (including labor supply disruptions).
- Fed speak today (Barkin): He flagged sticky inflation + better jobs data as reasons cuts could get pushed out—especially with higher oil adding inflation risk.
- Near-term focus: Tomorrow’s jobs report becomes the marquee event risk for rates. (Reuters also noted consensus around ~59K payroll growth and ~4.3% unemployment.)
3) Where Mortgage Rates Actually Are
- Freddie Mac (latest weekly): 5.98% on the 30-yr fixed.
- MND daily index: ~6.07% (this is the “real time vibe check” most borrowers feel).
- Why the tug-of-war: Jobless claims were steady (bond-friendly), but oil/geopolitics are pushing inflation risk back onto the table (bond-unfriendly).
4) Housing Market Check
- Inventory trend: Realtor.com shows active listings up ~7.9% YoY in February, but also says the pace of inventory recovery is plateauing (translation: more choices, but not a flood).
- Demand sensitivity: MBA said mortgage applications rose ~11% in the week ending Feb 27—buyers react fast when rates flirt with the high-5s/low-6s.
- The bigger pattern: Inventory and rates are improving just enough to lift transactions—until a headline shock (like oil) messes with affordability again.
5) PMarket Analysis – olitical Backdrop & Fed Independence
- Geopolitics is the story: The Iran conflict is now affecting energy, shipping, and inflation expectations—markets are acting like this could last, not like it’s a one-day scare.
- Fed implication: Higher energy prices can delay cuts even if growth cools, because the Fed can’t celebrate lower inflation while gasoline is doing parkour.
6) What This All Means for Rates Going Forward (three-scenario grid)
| Scenario | What has to happen | Rate impact |
| 1) “Oil calms down” (best case) | Conflict de-escalates, energy retraces, labor data stays “steady, not hot” | 10-yr drifts lower → mortgage pricing improves gradually |
| **2) Base case: choppy range | Mixed data + headline-driven risk (oil + geopolitics) | Rates stay range-bound, with good windows that don’t last long |
| 3) “Energy shock sticks” (ugly) | Oil stays elevated long enough to lift inflation expectations | 10-yr stays firm → lenders price defensively → mortgage rates resist dropping |
7) Market Analysis – Practical Takeaways
- Activity improves when rates stabilize, not just when they drop. The last few weeks showed buyers come back quickly when rates behave.
- Inventory is better than last year, but still not “normal.” That keeps price pressure from collapsing in most markets.
- Today’s headline risk is energy. If oil stays hot, it can slow the “rates drifting lower” story even with decent economic data.
8) Lock vs Float
Longer timelines (45+ days): Float with guardrails (clear trigger points), because if oil cools and jobs data doesn’t run hot, we can still get friendlier rate windows.
Closing soon (next 15–30 days): I’m generally lock-leaning in an oil-shock tape—headline risk can reprice bonds fast.
Stay safe and make today great!