Mortgage Rates Rally on Falling Oil

The bond market just delivered one of its strongest weeks in months—and mortgage professionals have plenty of reasons to be optimistic. In this week’s Master the Markets, host and expert Bill Bodnar explains how falling oil prices helped fuel a rally across the bond market, pushing the 10-year Treasury into the 4.30% range, driving the 2-year Treasury sharply lower, and lifting mortgage-backed securities to their best levels in nearly six weeks.
Interestingly, this rally came despite a hot Core PCE inflation reading. Bill explains why markets largely shrugged it off: the report reflects May data, while investors are already looking ahead to July. As always, markets are forward-looking, and declining energy prices have become the dominant story for mortgage rates.
This week, the spotlight shifts to the labor market. Mortgage professionals will be watching ADP private payrolls, JOLTS job openings, and Friday’s all-important jobs report. After a strong employment report last month, another healthy reading would reinforce confidence in both the economy and the housing market.