Mortgage rates got a boost from a calmer geopolitical backdrop as investors embraced signs that the White House is pursuing diplomacy with Iran rather than further military escalation. At the same time, fears that Japan could dump U.S. Treasuries to support the yen eased after Washington and Tokyo unveiled a coordinated plan for the United States to buy yen, helping stabilize the Japanese currency after it sank to a 40-year low.The economic data was surprisingly encouraging as well. Manufacturing activity surged to its highest level in four years, fueled by stronger hiring and expanding factory output, while one of the report's biggest surprises was a decline in inflation pressures. That combination of stronger growth, improving employment, and easing price pressures is about as good as bond investors could have hoped for.In today's episode, we break down why mortgage rates improved, what the U.S.-Japan currency agreement means for Treasury markets, why the manufacturing report was so impressive, and whether this favorable backdrop can continue in the weeks ahead.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

I am back from my one-month sabbatical just in time to discuss what the Fed could do for rates and why rates are down over the last three days.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

Rates plummeted to a 6-week low as oil prices continued to fall thanks to more activity in the Strait of Hormuz. In other news, President Trump canceled the bill signing for a bipartisan housing bill, and new home sales fell to the lowest level since January.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

Rates were basically unchanged as Iran negotiations seem to be going nowhere. In other news, Russia is trying to pressure Belarus to get involved in its war with Ukraine, and the Treasury auction for 2-year notes was better than expected.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

Rates rise on murkiness about the Iran peace deal and the announcement that Keir Starmer is resigning as Prime Minister, which marks the 7th PM in a decade. In other news, Alan Greenspan, the longest-serving Federal Reserve Chairman who was appointed by four presidents, died at the age of 100

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

Mortgage rates moved higher following Kevin Warsh's first meeting as Chairman of the Federal Reserve, though it would be difficult to place the blame solely on the new Fed chief. The market's attention quickly shifted to the Fed's updated rate projections, where nine of the nineteen policymakers now expect at least one rate hike this year, up from none just three months ago. Investors were clearly disappointed by the more hawkish outlook.Still, there was some encouraging news for the bond market. Warsh emphasized the Federal Reserve's commitment to price stability, a message that should resonate with bond investors who remain focused on inflation risks.Outside of monetary policy, the economic data was largely positive. Pending home sales posted their strongest monthly gain since September 2024, signaling renewed activity in the housing market, while retail sales came in well above expectations, suggesting consumers continue to spend despite ongoing economic uncertainties.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

As signs emerged that the Iran war may be winding down, financial markets responded positively. Oil prices plunged, stocks climbed to new record highs, and bond yields moved lower, helped further by a surprisingly strong 20-year Treasury auction that drew solid investor demand.The news wasn't entirely positive, however. The housing sector showed renewed signs of weakness as housing starts fell to their lowest level in five years, highlighting the challenges builders continue to face despite improving financial conditions.Tyler breaks down what the shifting geopolitical landscape means for mortgage rates, the bond market, and the outlook for housing.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

While bond futures fell more than 6 basis points to start the day, they closed almost back to Friday's close after uncertainty about the Iran deal began to emerge. In other news, Homebuilder confidence fell to the second-lowest level in the last nine months and manufacturing activity slowed more than expected in New York.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

Rates fell after President Donald Trump announced a possible deal with Iran, producer prices rose like CPI because of energy spikes, and the 30-year treasury auction was not very good...

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com

Inflation rose to 4.2% in May, the highest annual rate in three years, but the report wasn't quite as alarming as the headline number suggested. Nearly 60% of the monthly increase came from energy prices, as higher oil and gasoline costs continued to ripple through the economy.President Trump praised the report, saying he "loved the inflation," arguing that most of the increase was tied to energy rather than broad-based price pressures. While there is some truth to that interpretation, the comment could become a political liability heading into November as voters continue to grapple with higher prices.Meanwhile, bond markets largely looked past the inflation report. A strong 10-year Treasury auction helped steady yields, limiting the upward pressure on mortgage rates despite the hottest inflation reading since 2023.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit wilmingtonmortgage.substack.com