This is Matt Graham with the MBS Live market update. The Iran War remains the dominant theme with ongoing correlation between oil prices, stocks, and bonds. The stock market’s already decided that life is good and major averages hit new all time highs a couple times last week. Bonds and oil prices aren’t quite as convinced, and they haven’t recovered nearly as much of the territory lost during the course of the war, but both are more than halfway back to pre-war levels. But despite the war being the key driver, there is also plenty of headline fatigue. In other words, on any given day, there are hundreds of newswires hitting the screen that might have an impact or might have had an impact. Four to five weeks ago, but now they’re falling on relatively deaf ears. It’s only the meatiest headlines that they get a market reaction. And last week there was really only one that stood out above the rest in terms of creating volatility and volume in the bond market. And on Friday morning and involved Iran’s foreign minister announcing a reopening of the strait of hormuz for the remainder of the ceasefire, and this just goes to show us how the focus of this conflict is more on the commerce side of things than on the war itself. 10 year yields dropped almost 10 bips on that news to the lowest levels in more than a month, and oil brief. Flee broke below $80 a barrel. Everything bounced back in an unfriendly direction over the weekend as the US fired on and seized an Iranian ship, then Iran said it was canceling plans to reopen the straight of war moves. But in the last few hours there have been other headlines that have been more equivocal and made it seem like peace negotiations are back on and things could still be moving toward a resolution before tomorrow’s expiration of the two week ceasefire deadline. In the bigger picture, zooming out beyond all of this near term noise, the bond market has simply been consolidating in a fairly tame, almost boring way after hitting the high yields in late March. We’ve been sideways to slightly stronger since then. And if you had to specify a reason as to why things turned around, it would simply be that is the time at which headlines. Increasingly came out that spoke to both sides being interested in negotiations and deescalation. Yes, there’s been a lot of back and forth in those headlines, but the market’s pretty good at reading between the lines and detecting that there’s not really a will to remain in a war that’s causing fuel prices to do what they have been doing. Nobody really wants that. The average analyst assumes there will be some more downside potential for yields. In other words, that. Yields could fall further oil prices too if we get a confirmed peace agreement or even a memo of understanding about what a peace agreement will look like that said, it’s not likely that we would quickly return to pre-war levels. One thing not really having an impact on trading levels is economic data. We did have some last week, not a ton. The producer price index was probably the most interesting development because it came in so far below expectations at the core level, and also because the headline inflation number was well, not as high as expected, still the highest in several years, and the market didn’t react to that whatsoever. And the focus remained on war related headlines. It’s unclear what will happen with inflation metrics after the war ends. If oil prices drop quickly. Most analysts expect there to be some lingering effects from supply chain disruptions to. The energy sector. Other data included existing home sales coming in just below expectations. Nothing too interesting going on there. It’s just been kicking around the bottom of a long-term range for the past several years. Same story with builder confidence. Jobless claims came in at 2 0 7 versus two 15. Another nice low reading. And although continued claims did move up a little bit, they have generally been trending down since late 2025 and are operating in territory. That’s a bit lower than most analysts were expecting. So no real drama on the labor market front in the week ahead. The only real headliner is retail sales and analysts are expecting the headline number to be heavily affected by. Marches inflation from fuel prices. That’s why the focus should be more on the control group, which excludes autos, gas and building materials. That’s expected to come in at 0.2% versus 0.5%, whereas the headline is expected at 1.4 versus 0.6 last time. That’s gonna do it for this week. Back to you.
Matt Graham, Founder and CEO, MBS Live
Matt began as an originator in 2002. He fell in love with the idea of following MBS in real-time but felt that existing products were only scratching the surface. Thus was born MBS Live in 2007, the first-of-its-kind platform with real-time market data/analysis, and live chat with analysts, traders, and originators around the country. He is currently the Founder and CEO of MBS Live!
He’s been covering bond/mortgage markets, writing commentary, alerts, and chatting with the live community every business hour of every business day ever since.
Matt also serves as the Chief of Operations for mortgagenewsdaily.com, where he is one of the industry’s most respected mortgage rate experts, frequently quoted in the media. Mortgage News Daily’s rate index is used as the definitive resource on day-to-day mortgage rate averages.
He lives in the Pacific Northwest with his wife and son where he enjoys skiing, fishing, coaching youth sports, playing the guitar, and more DIY projects/hobbies than he’d care to admit.