Monday’s bond market has opened in positive territory due to Iran headlines. Stocks are responding to the same news, pushing the Dow up 877 points and the Nasdaq up 436 points. The bond market is currently up 8/32 (4.35%), but selling late Friday is going to keep this morning’s mortgage rates close to Friday’s morning pricing. If you saw an intraday increase late Friday afternoon, you should see an improvement of about the same size this morning.

There is nothing of importance scheduled for release today. We initially were seeing bonds react to warnings between President Trump and Iran regarding reopening the Strait of Hormuz and potential attacks on infrastructure and energy sites. This led to early morning weakness in both stocks and bonds. With shipping still at a standstill in the Strait of Hormuz because of fears of attacks from Iran, oil prices remain high. The threats to attack Iran’s power plants if they did not allow shipping traffic to resume by today is a clear sign the war (and its impact on oil costs and broader inflation) are not nearing an end.

However, there were new headlines this morning that are causing confusion in the markets. President Trump announced a delay in attacks on Iran’s power stations because peace talks between the two countries were productive. That has led to a knee-jerk reaction that has rallying and bond yields dropping lower. That said, it didn’t take long for Iran to say that it was not true and there were no ongoing talks directly with the U.S. or through intermediaries. Iran’s version is that the U.S. backed down from today’s ultimatum to open the Strait of Hormuz out of fear of how Iran would retaliate. Which version is accurate? Who knows, but the markets are looking for a reason to rally and this is it.

The remainder of the week brings us the release of only one monthly and one quarterly economic report for the markets to digest and both are just revisions to previously posted data. In addition to those two reports, there are also two auctions of shorter-term Treasury securities that may have a modest impact on rates during afternoon hours midweek. None of this week’s scheduled events are expected to cause a noticeable move in mortgage pricing, leaving Iran and related news to drive bond trading.

We will get the revised Productivity Index for the 4th Quarter of last year at 8:30 AM ET tomorrow morning. Analysts are expecting to see an increase of 2.7% in productivity, slightly lower than the initial estimate of 2.8%. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can grow without inflation concerns. This release also includes a labor costs reading that can be quite influential if it shows a surprise. However, since this data is quite aged now, it is unlikely to have a noticeable impact on mortgage rates unless it shows a significant change.

We also have a large number of Fed member speaking engagements to watch this week. Now that the FOMC meeting is behind us, the mandatory quiet period for its members has expired, allowing for individual thoughts to be heard about the Iran war, the economy, inflation and potential rate cuts. Many of these speeches will be uneventful with mundane topics listed, but traders will be listening for any surprise tidbits of information. They take place any time from early morning to evening hours throughout the week, so they can come into play at any time. There are three that stand out above the rest in terms of most likely to affect rates, scheduled tomorrow and Thursday evenings.

Overall, no day stands out as a clear candidate for most important for rates due to the lack of influential data and other events. The same can be said for calmest day also. Bond trading and mortgage rates will probably be driven mostly by Iran-related headlines. Signs that the Strait of Hormuz may reopen soon would be great news for bonds and should lead to a bond rally, pushing mortgage rates noticeably lower. However, if the attacks back and forth escalate with no sign of ships resuming travel through that area, we could see oil prices and mortgage rates move higher again for the week. With so much uncertainty ahead of us, it would be prudent to keep a close eye on the markets if still floating an interest rate.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.