Last week was decidedly stronger for mortgage rates as they either held steady or moved lower on 5 out of 5 days. All told, it was a 0.14% drop from the previous week in terms of the average top-tier 30yr fixed rate.  The new week is starting out in opposite fashion with rates moving up 0.07% today alone. This follows news over the weekend that Trump rejected Iran’s counterproposal to end the war. In general, the longer the war continues, the higher oil prices will remain.  Oil price don’t dictate rates, but there’s currently a lot of correlation due to inflation implications. Oil naturally impacts the cost to ship goods, so a rapid spike in oil prices increases inflation. Rates are based on bonds, and bonds hate inflation. In fact, inflation is technically a component of bond yields (aka “rates”). Despite the rocky start to the week, we’re not necessarily destined to move in one direction or the other. Everything depends on progress toward peace, or lack thereof. To a lesser extent, this week’s incoming economic data can also have an impact. Coincidentally, much of that data focuses on inflation for the month of April.

Bonds are starting the day moderately weaker. The reasons are straightforward. Chief among them, Trump rejected Iran’s counterproposal to end the war, calling it “totally unacceptable.” In response, Iran’s foreign minister said it will never bow to foreign pressure. Adding fuel to the fire, Netanyahu said the war was not over and there was “more work to be done.”  When trading began late Sunday night, oil prices were roughly 5bps higher and 10yr yields rose 4bps to roughly 4.40%. Despite those losses, trading levels for both oil prices and bond yields remain lower than they were before last week’s big rally on Wednesday morning.

The Federal Reserve’s April financial stability report found that asset valuations remain elevated, even as investors are beginning to demand more compensation for risk amid rising uncertainty around monetary policy.

First American claims Liberty National’s owner changed the company’s name immediately after a judge held her firm liable for an erroneous wire transfer.

Lender and servicer Loandepot, reeling from a larger loss in the first quarter, could use the potential funds to cover daily operations or repay debt.

Alongside its cloud-based brokerage, the company said the acquisition will transform eXp’s existing infrastructure into a multi-model platform.

The opinion that supports national banks’ ability to avoid paying interest on certain mortgage accounts in New York is unlikely to be the last word.

The latest offer, 70 cents per share higher than previously agreed to, equals the cash proposal made by UWM Holdings to win over Two Harbors’ shareholders.

Calm and Slightly Stronger, But Volatility Will be Back

Once or twice per week, the bond market manages to post a fairly calm trading day against the prevailing backdrop of generally higher volatility. Today was such a day. The most helpful catalyst was an absence of any major war-related headlines and associated oil price volatility. That said, it’s a near certainty that war-related volatility will be back in the coming week. 

Econ Data / Events

Average earnings mm (Apr)

0.2% vs 0.3% f’cast, 0.2% prev

Non Farm Payrolls (Apr)

115K vs 62K f’cast, 178K prev

Participation Rate (Apr)

61.8% vs — f’cast, 61.9% prev

Unemployment rate mm (Apr)

4.3% vs 4.3% f’cast, 4.3% prev

Consumer Sentiment (May)

48.2 vs 49.5 f’cast, 49.8 prev

Sentiment: 1y Inflation (May)

4.5% vs — f’cast, 4.7% prev

Sentiment: 5y Inflation (May)

3.4% vs — f’cast, 3.5% prev

Market Movement Recap

08:32 AM No major reaction to jobs report. MBS up 2 ticks (.06) and 10yr down 1.5bps at 4.375

10:46 AM Slightly stronger but leveling off.  MBS up 6 ticks (.19) and 10yr down 3.6bps at 4.356

02:13 PM MBS up 5 ticks (.16) and 10yr down 3.5bps at 4.356

It ended up being a decent round trip for rates this week. Monday kicked things off with a jump to the highest level in more than a month, and the third highest since August 2025. But that ended up being the only day where rates went higher.  Wednesday brough the biggest chunk of the recovery with MND’s daily rate index dropping 0.10%.  Tuesday and Friday (today) each added a 0.02% drop, taking the index to 6.42% after ending last week at 6.44%. War-related headlines were less of a factor today and volatility was unsurprisingly lighter as a result. This is an adjustment for seasoned rate watchers who are used to monthly jobs report being a distinct source of volatility. It’s especially notable that the job count came in significantly higher with no ill effect on bonds/rates. Over the past 6 months, markets have shifted their jobs report focus from the payroll count to the unemployment rate, reversing decades of precedent. Today’s outcome is more logical in that context as the unemployment rate was right in line with expectations at 4.3%.