The word of the day is “stalled.” You can’t get far reading top news stories over the weekend without seeing it in reference to the negotiations that looked at least somewhat possible on Friday afternoon. At that time, official word was that Witkoff/Kushner were heading to Pakistan on Saturday morning to meet with Iran’s FM Araghchi, but the US contingent never made the trek. Now this morning there are additional reports that a resumption of military operations is being considered. One would think this would make for a big hit to financial markets, but oil prices and bond yields are only modestly higher. And stocks are actually in slightly stronger territory, once again pushing new all-time highs.

The government guarantor aims to distinguish delinquencies reported as a result of a Federal Housing Administration rule change from broader market trends.

The Long Island-based regional bank, which has been in turnaround mode for two years, reduced its earnings per share guidance for 2026 and 2027. It cited an expected decrease in net interest income due to higher levels of payoffs and paydowns in commercial real estate.

Delinquencies also showed signs of overall improvement in March, despite an increase in foreclosure numbers, ICE Mortgage Technology said.

But in its earnings release, parent company Hilltop Holdings warned its full year 2026 results are going to be impacted by things outside of its control.

U.S. Attorney for the District of Columbia Jeanine Pirro said in a social media post Friday morning that the Justice Department is closing its investigation into Federal Reserve Chair Jerome Powell, clearing a path for Kevin Warsh to be confirmed as Powell’s replacement.

Similar Volatility But in a Friendlier Direction

The bond market saw a roughly identical amount of volatility on each of the last 2 days of the week, but Friday’s version played out in a friendlier direction. Headlines suggested improved prospects of peace negotiations over the weekend. While there is no scheduled talk with the US and Iran, high level reps from both sides are currently–or soon will be–in Pakistan. But the war headlines only get part of the credit. Bonds also got a boost from news that the DOJ dropped its case against Powell, thus paving the way for a Warsh confirmation. In the market’s view, this improves the odds of a rate cut in 2026, even if only slightly.  2yr yields rallied much more than 10s, as one would expect when markets are trading Fed rate expectations. 

Market Movement Recap

08:49 AM Roughly unchanged after modest 2-way volatility. MBS up 2 ticks (.06) and 10yr down 0.4bps at 4.321

09:40 AM moving into weaker territory. MBS down 1 tick (.03) on the day and over an eighth from the early price plateau. 10yr up 1.3bps at 4.338

10:19 AM 10yr at lows of day, down 2.2bps at 4.303. MBS up 6 ticks (.19). Move follows new of DOJ potentially dropping Powell case

01:19 PM Mostly sideways since last update. MBS up an eighth and 10yr down 1.5bps at 4.311

With zero change versus Thursday’s latest levels, the 30yr fixed mortgage rate index maintained a 0.03% range for the entire week (and 0.04% going back to last Tuesday). At 6.32%, today’s mark is close enough to Friday’s 6.29% to say rates are hovering at the lowest levels in more than a month. The sideways drift reflects uncertainty surrounding the next phase in the Iran war. Prospects for negotiations were called into question for most of the week, but improved somewhat on Friday. A successful end to the war would likely bring some additional improvement for rates, but the true test would be the longer-term realities for oil prices and their impact on inflation. The week ahead brings the next Fed announcement. Markets are pricing in a zero percent chance of a cut or a hike. The Fed’s rate cutting hands are tied until/unless inflation moves back down and they won’t preemptively assume that will happen until post-war oil price dynamics play out for a few months.

Short version: The Pending Home Sales Index remains in the same low, narrow, sideways range that’s been intact for 3 years. The good news is that there’s been a reliable floor. The bad news is that the top of the range lines up with the historic lows seen in 2010 (April 2020 notwithstanding).  Longer version: Pending home sales moved modestly higher in March, breaking from recent softness but remaining within a relatively subdued range. The National Association of Realtors’ Pending Home Sales Index (PHSI) increased 1.5% month over month while declining 1.1% compared with the same time last year. The monthly gain suggests some underlying demand resilience, even as mortgage rates remained elevated. However, on an annual basis, contract activity continues to reflect a market still working through affordability constraints and uneven buyer participation. NAR Chief Economist Lawrence Yun noted that, ” Contract signings rose in March despite higher mortgage rates, pointing to pent-up housing demand… A greater supply of inventory will help translate that demand into more home sales. ” He added that demand remains particularly rate-sensitive among first-time and younger buyers, underscoring the need for additional supply in smaller, more affordable homes. Regional performance remained mixed. The Northeast and South posted monthly gains, while the Midwest and West saw declines. On a year-over-year basis, only the South recorded an increase, with the remaining regions continuing to trend lower — highlighting ongoing regional divergence in housing activity.

Mortgage applications surged last week, posting a strong rebound as declining rates and improving market sentiment drove broad-based gains. The Mortgage Bankers Association (MBA) reported a 7.9% increase on a seasonally adjusted basis for the week ending April 17. Both refinance and purchase activity contributed to the increase, with the Refinance Index rising 6% from the previous week and standing 52% higher than one year ago. Purchase applications showed even stronger momentum, climbing 10% week over week and up 14% on an annual basis — a notable shift after recent softness. The improvement comes as mortgage rates moved lower, with the average 30-year fixed rate declining to 6.35% . The drop was driven in part by easing geopolitical tensions and lower oil prices, which helped stabilize financial markets and restore some borrower confidence. MBA’s Mike Fratantoni said, ” Mortgage rates declined last week as financial markets responded positively to the Middle East ceasefire and the lower trend in oil prices… purchase application volume increased an even stronger 10 percent and was up 14 percent compared to last year’s pace. Despite the geopolitical uncertainty, housing demand is being supported by a still resilient job market, and homebuyers are experiencing a buyer’s market in most of the country… ” Application composition shifted slightly away from refinancing, with refinance share decreasing to 44.2% from 45.5% the prior week. ARM share also declined to 8.0% . FHA share held steady at 18.2% , while VA share decreased to 15.0% and USDA share remained unchanged at 0.5% .