"Markets can get very wild with an X factor because people just don't know what is going on yet, so this week was going to be bumpy if escalation continued, and that is what we are seeing today. Unlike the bombing of Iran nuclear facilities last year, which was one-and-done and ended quickly, the extent of this Iran event is still up in the air."
"One good thing for the mortgage market is that mortgage spreads under 2% have helped with mortgage pricing this year. In January when Trump announced Fannie and Freddie would buy $200 billion in mortgage backed securities, my main takeaway was that it was a defensive play, and so far that defensive play has kept mortgage rates closer to 6% than 7%."
"For me personally, I will believe the bond market is taking this more seriously when the 10-year yield closes above 4.15% and gets follow through bond market selling after that. Until then, I'm not 100% convinced that the escalation has been priced in, so there is more upside to yields than what we have seen so far."
Market uncertainty stems from ongoing Iran escalation with unclear resolution, contrasting with last year's quick resolution. Inflation pressures emerge from hot PPI and ISM Prices Paid data, while jobless claims remain stable. The 10-year yield at 4.09% suggests incomplete pricing of escalation risks. Mortgage markets benefit from spreads under 2% and Trump's January announcement of $200 billion in Fannie and Freddie mortgage-backed securities purchases, keeping rates near 6% rather than 7%. Significant economic data arrives Friday, including jobs reports. Full bond market repricing may occur if 10-year yields exceed 4.15% with sustained selling pressure.
Read at www.housingwire.com
Unable to calculate read time
Collection
[
|
...
]