"The Iran conflict finally pushed the 10-year yield above a key level on Friday morning and if this move sticks and the conflict escalates further, mortgage rates are at risk of heading much higher during the spring season, something that wasn't the case even a few weeks ago."
"Even some doves at the Federal Reserve turned hawkish this week, as Fed Governor Christopher Waller took a hawkish stance in a CNBC interview Friday morning, which also added to the bond market's move higher."
"The longer this conflict goes on, the greater the risk of things getting worse with oil prices, which would mean higher inflation becomes embedded in the 2026 inflation outlook."
"Since 2010, we have had high oil prices and an expanding economy, which means bond yields can remain elevated because the impact on the economy may take time to materialize."
The Iran conflict has pushed the 10-year yield above 4.38%, raising concerns about higher mortgage rates in the spring. The Federal Reserve's tone has shifted, with some members adopting a hawkish stance, contributing to the bond market's rise. Oil prices remain elevated, and prolonged conflict could lead to higher inflation expectations. Despite fears of recession, historical trends show that high oil prices do not necessarily correlate with economic downturns. The market is now pricing in a significant chance of a rate hike later this year, with no cuts anticipated.
Read at www.housingwire.com
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