ast week, mortgage rates were acting unusually calm. Almost suspiciously calm. The kind of calm where you start looking around and asking, “Okay… what’s about to break?”
Well, this week answered that question.
Monday was still boring — basically a continuation of last week’s ultra-tight, sleepy little range. But then Tuesday and Wednesday showed up, kicked the door open, and did most of the damage. Thankfully, Thursday and Friday brought rates down just a tiny bit, but not enough to undo the move.
The Tuesday rate spike came after news that the U.S. was not exactly thrilled with Iran’s latest peace proposal. Then Wednesday added more fuel to the fire when reports came out that the administration met with oil executives to discuss the potential impact of a prolonged blockade on the Strait of Hormuz.
That matters because, from the beginning, the market’s reaction to the Iran war has really been about one big concern: whether oil and other energy commodities can keep moving freely through global shipping lanes.
In plain English: if oil gets more expensive, inflation worries heat up. If inflation worries heat up, bond yields often rise. And when bond yields rise, mortgage rates usually follow.
It is not a perfect chain reaction every second of every day, but lately, oil prices and bond yields have been moving together like they are carpooling to work.
By the end of the week, reports suggested the odds of a peace deal may have improved a bit. That helped oil prices and bond yields ease slightly, which explains the small rate relief toward the end of the chart.
Not a victory parade. More like a polite golf clap.
Powell’s Last Fed Press Conference — But Not His Last Fed Meeting
This week also brought the latest Fed announcement.
Nobody seriously expected a rate hike or a rate cut at this meeting, so markets were watching the details: the wording of the Fed’s statement, the voting breakdown, and Powell’s press conference.
The notable part was that three Fed members voted against the wording of Wednesday’s statement. Their issue was that they believed the Fed should do more to acknowledge that rates could move either up or down depending on where inflation heads in the coming months.
Bond yields moved a little higher after that, but let’s not overdramatize it. More than 80% of the day’s rate damage had already happened because of war-related headlines.
The more interesting twist was Powell announcing that he plans to remain on the Fed board after Warsh becomes Fed Chair. That would make him the first Fed Chair to stick around like that since Eccles in 1948.
Apparently, the decision is tied to the possibility that the DOJ’s investigation into Fed building renovation costs could be reopened. And yes, the building in question is the Eccles building.
You can’t make this stuff up. Well, you could, but it would sound too weird for a finance newsletter.
No Jobs Report This Friday?
Normally, the first Friday of the month means one thing for the bond market: the big jobs report.
This report is usually the heavyweight champion of monthly economic data. But not today.
The market already knew this was coming. When Friday lands on the first day or two of a new month — especially after a month with fewer business days — the Bureau of Labor Statistics does not have enough time to complete the report.
So instead of arriving today, the jobs report will be released next Friday. That means next week should be more active, with both economic data and Fed speeches on deck.
The Bottom Line
Economic data can absolutely move mortgage rates, and next week has plenty of chances for that to happen.
But right now, the bigger wildcard is still the Iran war. Major developments there — especially anything affecting oil, shipping routes, inflation fears, or peace prospects — are more likely to create the bigger and longer-lasting market moves.
So yes, rates jumped this week.
But for now, they also seemed to find a ceiling.
Let’s hope that ceiling holds — because nobody wants mortgage rates walking around with a ladder.