This morning, Stocks and Mortgage Bonds are both trading lower following reports that Israel has launched strikes on several nuclear sites in Iran. Under normal circumstances, we’d expect global uncertainty like this to trigger a selloff in Stocks, with money flowing into the relative safety of Bonds—often helping to improve mortgage rates.
However, the market reaction is different this time. The strikes have fueled concerns over oil supply disruptions, pushing crude prices up 8% today and over 16% in just the past week. Rising oil prices tend to stoke inflation fears, and inflation is the enemy of Bonds. That’s why we’re seeing pressure on both Stocks and Bonds simultaneously, with mortgage rates drifting higher as a result.
There’s also rising tension around reports that Israel may target Iranian oil refineries if Iran doesn’t deescalate its nuclear efforts. Should that happen, oil prices could surge even further—potentially driving inflation higher and putting upward pressure on interest rates. This is something we’ll be watching closely in the days ahead.
On a more encouraging note, yesterday’s 30-year Treasury auction was met with strong demand, following a solid performance in the 10-year auction earlier this week. Foreign interest in U.S. debt remained healthy, easing some of the recent concerns about reduced global appetite for Treasuries. That support helps stabilize long-term rates and is good news for the mortgage market in the longer run.
At Crestone Mortgage, we’re keeping a close eye on these developments and how they may affect mortgage pricing. As always, we’re here to help you navigate a changing rate environment with confidence.