This week has seven monthly and quarterly economic reports that may influence mortgage rates, two of which are considered to be of upper importance to the markets and may have a stronger impact on rates than the others. In addition to the data there are also a couple of Treasury auctions and an abundance of Fed-member speeches now that the FOMC meeting is behind us, including two congressional appearances by Chairman Powell. With at least one item scheduled each day and most having multiple events set, it is safe to assume we will see noticeable movement in mortgage rates this week.
Before tackling the week’s upcoming activities, we need to address this weekend’s U.S. military action in Iran. There are enough news headlines to assume our readers know what exactly transpired. The big question is how it will impact the bond market and mortgage rates. That likely depends on whether this was a one-off action or if there will be retaliation by Iran that draws the U.S. more into the conflict with Israel. If our direct involvement is limited to this weekend’s bombing, then whatever reaction we see in the bond market tomorrow should be short-lived. However, any action by Iran or its allies that causes us to respond further should have a positive impact on bonds, leading to lower yields and mortgage rates. Under the latter scenario, we would probably see a flight-to-safety move where domestic and international investors move funds into the safety of the U.S. bond market to escape the global volatility in stocks. The longer-term impact may not be so mortgage rate friendly with oil prices and inflation rising and more debt to be sold to fund the war, but the short-term influence should help push mortgage rates lower. At this moment, it looks like both stocks and bonds are going to open in negative territory tomorrow. That said, a lot can change overnight though.