Good morning on this best day of the week Wednesday from your Hometown Lender. Let’s get to today’s market analysis!
Yesterday saw bonds lose ground early, but ended the day up in a very late day recovery. There was some movement by mortgage bonds through the day, but it was never enough to remotely worry about. The day did end with some concern what today would bring, with the CPI inflation data coming early as well as President Trump warning that the U.S. “must respond” after Iran shot down a U.S. helicopter after previously saying a deal with Iran could be reached “in two or three days” that would open the Strait of Hormuz.
Rate sheets today will improve a bit as bonds gain some ground in a bit of a relief rally after the CPI data came out. Despite headlines about how consumer inflation rose 4.2% annually in May (higher than April’s 3.8%), the highest in three years, that increase was right at expectations. Markets were more relieved that core CPI, which removes the volatile energy and food prices that are driving up headline inflation numbers were much lower… increasing 0.2% from April and only 2.9% from a year earlier. The bottom line here is that inflation is a concern, but has not gotten out of control yet, and is less likely to need the Fed to raise its policy rate sooner to rein it in.
Risk on the day is moderate, we could see bonds lose some optimism as the day progresses… especially if there is more news that things are escalating in the Middle East. Trump has posted that Iran would “pay the price” and has “taken too long” to agree to a deal. Oil prices ticked higher but have fallen back a bit. Right now markets seem convinced that a deal will get done, and maybe even soon… and remain unrattled about the military action. According to U.S. Energy Secretary Chris Wright, ship traffic through the Strait of Hormuz has already risen and will continue to rise, helping oil prices.
Market Analysis – From a higher and better view:
Market Analysis – Quick Snapshot
Bonds: The 10-year Treasury is near 4.52%, basically flat after May CPI came in hot but mostly as expected. Bonds did not love the inflation number, but at least it was not wearing a surprise party hat.
Mortgage Rates: Daily tracking shows the 30-year fixed around 6.55% and the 15-year fixed around 5.93%. Freddie Mac’s latest weekly survey showed the 30-year at 6.48%, so real-time pricing is running a little hotter than the weekly average.
Inflation: May CPI rose 4.2% year over year and 0.5% month over month, the fastest annual pace since April 2023. Energy remains the main pressure point, driven by higher oil and Middle East supply disruption.
Fed Watch: The market still expects the Fed to hold at the June 17 meeting. The bigger question is no longer “when are cuts coming?” It is whether sticky inflation and strong jobs keep the Fed on hold longer — or eventually force a hike.
Politics / Geopolitics: Oil moved higher after renewed U.S.-Iran strikes and tougher comments from President Trump. Higher oil keeps inflation pressure alive, which keeps mortgage rates from getting comfortable.
Market Analysis – What It Means
Today’s data was not a disaster, but it was not friendly either. Inflation is still too high, jobs are still strong, and oil is still volatile. That gives the Fed very little room to cut and keeps mortgage rates choppy in the mid-6% range.
In plain English: the market is not broken, but it is not handing out easy payments either.
Market Analysis – Housing & Mortgage Strategy
Buyers are still active, but they are payment-sensitive. This is not a “wait for the perfect rate” market. It is a structure-the-payment market.
The best conversations right now are about:
Seller credits, temporary buydowns, permanent buydowns, ARM options where appropriate, and a realistic refinance plan if rates improve later.
Sellers and builders who help solve the monthly payment problem have the best chance of converting interest into contracts.
Lock vs. Float
Lock bias: If closing within 30 days, the borrower is payment-sensitive, or the file is tight, locking is still the cleaner recommendation.
Float bias: Floating only makes sense with time, flexibility, and a clear trigger. With CPI hot, oil rising, and the Fed still cautious, floating without a plan is not strategy
Stay safe and make today great!