It’s a very light week of data with only weekly initial jobless claims on Thursday and flash U.S. services PMI on Friday.
The dearth of reporting means the focus will be on the ongoing conflict in the Middle East, which has ratcheted up lately.
The U.S. just completed a ninth consecutive night of strikes against Iran in a bid to weaken their attack capabilities on ships navigating the Strait of Hormuz.
Despite that, oil prices have eased from their highs, though they have ticked up again recently.
As such, any mortgage rate movement this week will likely be tied to geopolitics.
Limited Economic Data Means the War Will Drive Mortgage Rates This Week
As noted, there’s not much on the economic calendar this week. We get jobless claims every week so that’s a given.
And there’s virtually nothing else until Friday, when we get the flash U.S. services PMI, which provides a snapshot of the economy and whether it’s expanding or contracting.
It’s known as an important report, but pales in comparison to things like CPI, PCE (the Fed’s preferred inflation gauge), and the monthly jobs report.
So that means we’ll be looking at geopolitical developments to determine the direction of mortgage rates this week.
They had a bit of a wild ride last week, with the 30-year fixed climbing to its 2026-high of 6.75% on Monday, before easing thanks to a series of cool inflation reports.
Mortgage rates ran the risk of hitting new-52 week highs, but fortunately both CPI and PPI came in below consensus.
That “saved” mortgage rates, though it only allowed them to ease back down to around 6.625% instead of perhaps climbing to 6.875% and beyond.
Can We Continue to Avoid 7% Mortgage Rates?
One thing I’ve been keeping a close eye on is a return to 7% mortgage rates.
Thus far, despite the surge in oil prices and the threat of even more escalations in the Middle East, mortgage rates have stayed below 7%.
The 30-year fixed has gotten close, but it seems to have a lid that has kept it from reaching those psychologically-challenging heights.
But there are reports that Houthi militants in Yemen have “declared a maritime embargo” against Saudi Arabia, which is apparently effective immediately.
The Saudis have been moving their oil to an export terminal on the Red Sea to bypass the Strait of Hormuz.
Assuming this makes a real impact, it could choke off more oil supplies and lead to another increase in prices, putting more pressure on inflation again.
Bonds (and mortgage rates) suffer when inflation rises, so this will be the key story to watch this week and beyond.
As I said, mortgage rates have done a good job avoiding bigger losses in spite of what’s going on there.
Though on the other side of the coin, they are still up sizably since the Iranian conflict got underway around the end of February.
The 30-year fixed was priced just below 6% at that time, and today is closer to 6.625% to 6.75%.
That’s roughly 75 basis points higher, meaning you could argue a lot of it is baked in already, which is helping us steer clear of 7%.
However, if this conflict continues and/or worsens, it’s possible we go higher. And we aren’t too far from 7% in the grand scheme.
What’s keeping us from that seems to be a belief that negotiations could still be reached to end the conflict.
At which point we ideally get back on track to pre-war levels when rates were closer to 6% and below.
Read on: Try out my mortgage rate calculator that compares rates/payments by eighths of a percent.
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