Normally, global conflict pushes investors toward safe-haven assets like bonds, helping mortgage rates fall. But last week, markets broke the script. In this episode of Master the Markets, host and expert Bill Bodnar explains why escalating tensions involving Israel, the U.S., and Iran didn’t lead to the typical bond rally — and why oil prices were the real driver.
Oil surged toward $88 per barrel, overpowering the traditional safe-haven trade and even overshadowing weaker economic data. In fact, a disappointing jobs report last Friday was largely ignored by the bond market as energy prices took center stage. Bill emphasizes that mortgage professionals should keep a close eye on the relationship between oil prices and bond yields, because energy inflation can quickly shift interest rate expectations.
Looking ahead, this week’s economic calendar is relatively quiet with no scheduled Fed speakers, though several inflation readings will still attract attention. However, the real wildcard remains geopolitical developments — particularly disruptions in the Strait of Hormuz, a key oil shipping route. A resolution could remove a $10–$20 geopolitical premium currently embedded in oil prices, while continued tensions could keep pressure on rates.
