Mortgage rates moved higher on Wednesday despite only a modest increase in oil prices. The latter is currently a part of any conversation about interest rates as higher energy costs have fueled inflation expectations. Higher inflation begets higher rates, all else equal. But rates take other cues, or course. One key consideration is that of “supply.” In other words, how many new dollars of debt are being issued–not just by the U.S. government, but across the entire bond market.  At present, government issuance is high and only expected to get higher. Even though congressional approval is ultimately required, armed conflict can increase expectations for future military spending. There’s also uncertainty over tariff refunds which would further increase the supply of U.S. Treasuries to offset the lost revenue. Last but not least, this week brings scheduled Treasury auctions. The market knew about these ahead of time, but on some auction weeks, the results reveal an imbalance between buyers and sellers that increases momentum toward higher or lower interest rates. This week, that momentum has been generally higher. The net effect on mortgage rates is a conventional top-tier 30yr fixed that is back to February 4th levels on average. 

There was a very high bar for today’s CPI to cause any serious market reaction due to all the new inflationary impulses that may be created by record volatility in energy markets that hasn’t yet made it into the official data. In other words, CPI is a time capsule for a bygone era and the market is already trading the implications on future inflation reports to the best of its ability using oil prices as a proxy. Before the data, 10yr yields were a few bps higher overnight and haven’t moved since the data. MBS are unchanged to a hair stronger after accounting for “the roll.” 
Rather than dissect the data that failed to move the market (it was fairly boring anyway as everything came in right in line with forecasts), we can take another look at the interesting impact of chart scaling. Specifically, we talked about how Treasuries broke up and away from the path suggested by oil prices yesterday. A full 3-day chart reiterates that assessment:

But if we zoom in to a 2-day chart (which chops off the super high oil prices on Monday), it’s much easier to see that oil and yields are still strongly correlated.

Technology is a two-edged sword. Have you ever heard of “surveillance pricing?” “Big brother” knows a lot about you. Ridesharing companies like Uber, for instance, can charge users more when they have lower battery life on their phone. “Democrats in Pennsylvania have introduced a bill that would stop retailers from changing the price of essential goods and services in a given 24 hour period.” I’d like to know what “essential” means. When computers and data go awry, look out. And when you combine that with regulators and the U.S. Government, problems can be all-consuming. “Credit Bureaus Are Leaving More Mistakes on Frustrated Consumers’ Reports Under Trump’s CFPB” is making its way around our biz. Credit, and the companies that report that information, will certainly be a topic on today’s Mortgage Matters at 2PM ET, presented by Lenders One, featuring Matt Van Fossen. (Today’s podcast can be found here and this week’s ‘casts are sponsored by Floify, an industry-leading point of sale platform. The Dynamic Apps 2.0 AI-powered enhancement lets lenders tailor application flows by loan type, leading to higher completion rates, less operational back-and-forth and specialty lending without the one-size-fits-all compromise. Hear an interview with Floify’s Jason Mapes on automating tasks like data extraction, document validation, and 1003 completion within the POS, enabling lenders to deliver faster, cleaner, and more compliant loan files without introducing risky borrower-facing AI interactions.)

Comptroller of the Currency Jonathan Gould said that the Office of the Comptroller of the Currency would continue to pursue its view on federal preemption of state banking policy in court and in Congress.

CEO Anthony Hsieh said refinances should provide notable benefit to its direct lending unit a day after LoanDepot announced a return to the wholesale channel.

UWM raised its Q1 and full-year 2026 revenue guidance ahead of Two Harbors’ March 16 shareholder vote, citing AI efficiency gains, amid stock volatility since the merger announcement.

Nonagency underwriting is expanding but the public sector is a different story due to recent performance issues, according to the Mortgage Bankers Association.

Civil rights groups object to a $68 million settlement between the Department of Justice and Colony Ridge Development in Texas, calling the deal a sham for funneling $20 million into immigration enforcement and surveillance of victims.

Afternoon Weakness in Bonds Despite Lower Oil Prices. Will CPI Matter?

Days like today are a problem for a “set it and forget it” mentality when it comes to energy prices and the bond market. On many occasions since the beginning of last week, the correlation between oil prices and bond yields has been plain to see. Additionally, oil price volatility has been the only way to explain much of the movement in bonds. Now this afternoon, bond yields broke higher despite no clear cues from oil. We are left to lean on things like a weak 3yr Treasury auction and general supply pressures surrounding a large corporate bond issued by Amazon. Tomorrow brings CPI–usually a relevant market mover, but unlikely to carry as much weight given the current backdrop.

Econ Data / Events

ADP Weekly Employment

15.5k vs 12.75k prev

Market Movement Recap

08:56 AM Weaker overnight vs Monday’s late-day rally levels.  Stronger vs 3pm close. 10yr at 4.124. MBS down 19bps from 5pm, but up a few bps vs 3pm.

09:54 AM MBS down 5 ticks (.16) on the day and 10yr up 2.5bps at 4.12 

12:17 PM MBS down 3 ticks (.09) and 10yr up 1.6bps at 4.112

03:22 PM MBS down 7 ticks (.22) and 10yr up 4.6bps at 4.142

In the highest-priced housing markets, some buyers see adjustable-rate mortgages as the only loan they may initially qualify for, Cotality found.