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New Week. Same Old Story While we certainly CAN put short term market movement under a microscope and entertain various potential sources of motivation, it's just as good to take a few giant steps back and observe the bigger picture trend. When we do, we see a decisively weaker trend since October 2025 with additional volatility and selling pressure after the start of the Iran war. Unsurprisingly resurgence of hostilities has put upward pressure on both fuel prices and bond yields. This is definitely one of those "under the microscope" market movers at the start of the week. There were also some tradeflow considerations regardless of news headlines. This was seen in the form of both stocks and bonds noticeably shifting just after 9:30am. Until that point, stocks were improving and bonds were doing a decent job holding sideways. Afterward, both lost ground. Market Movement Recap 09:17 AM modestly weaker overnight. MBS down 1 tick (.03) and 10yr up 2.1bps at 4.567 11:41 AM MBS down 7 ticks (.22) and 10yr up 4.7bps at 4.593 02:49 PM MBS down 7 ticks (.22) and 10yr up 5.2bps at 4.597

Last week ended on a promising note with Friday's rates falling just barely below the previous Friday's levels. This was a relief after the top-tier 30yr fixed rate matched 11-month highs for the average lender earlier in the week. Unfortunately, rates are starting the new week by heading back toward those highs. Our 30yr fixed rate index is up from 6.63% on Friday to 6.71% today. Many lenders raised rates in the middle of the day in response to weakness in the bond market. In general, that weakness is underpinned by renewed fighting in Iran (or more specifically, the effect of that fighting on fuel prices). [thirtyyearmortgagerates]

Dang. I don’t know why I put my entire retirement plan into SpaceX stock… it has lost $1 trillion in book value since its post-IPO high. In 2026 Fannie’s stock price is down 44 percent, and Freddie’s stock price is down 46 percent. Did you sink your 401(k) into either, when doing a “re-IPO” was the talk of the Trump Administration? (Speaking of Fannie, rumors are flying that Fannie Lender Letter LL-2026-04 on AI will be followed by a more prescriptive framework.) One would hope that the industry has input into Freddie and Fannie’s activities. Mortgage leaders have limited influence over many of the forces dominating today's housing debate: They cannot directly control interest rates, housing inventory, inflation, or the pace of legislative reform. But they can direct how effectively their organizations prepare for technological disruption. The lenders that spend the coming years waiting for external solutions to affordability challenges may find themselves reacting to change rather than shaping it. By contrast, those that invest now in AI-ready operating models, governance structures, and workforce capabilities will be positioned to create lasting competitive advantages regardless of the broader economic environment. Housing policy will remain important, but the defining strategic decisions of the next decade are increasingly likely to occur not in Washington, but within the institutions responsible for financing homeownership itself. (Today’s podcast can be found here. This week’s ‘casts are sponsored by JazzX, the first true end-to-end AI platform built for mortgage. From application to underwriting, JazzX is a new operating model that helps you scale growth, boost productivity, and transform how your team performs. Today’s has an interview with the Institutional Risk Analyst’s Chris Whalen on the fallout from the Two Harbors servicing deal, further consolidation in the mortgage industry, and dominos to fall as companies race to grab market share.)

You've seen the "good vibes only" t-shirt perhaps? Bond traders left theirs at home this morning. That's unfortunate as there isn't much beyond vibes to set the tone this week. Over the weekend, bad vibes came courtesy of another round of escalation in the Iran war. Additionally, the safe-haven buying that helped bonds on Friday has reversed course somewhat as stocks find their footing. At 7:30am, news of a proposed 10-day ceasefire caused yields and fuel prices to drop quickly but not excessively.  30 minutes later, the move was reversed after Houthis declared a naval blockade against Saudi Arabia. 10yr yields are starting out several bps higher and MBS are down about an eighth. On the bright side, there's still quite a bit of room for yields to find a supportive ceiling between current levels and recent highs. And if we instead use the gloomier approach via the 9 month uptrend in yields, there's even more room to rally back toward the lower end of this trend channel.

Roughly Unchanged After Gradual Weakness Bonds ended the day roughly unchanged despite this morning's stronger start. With the S&P falling back to the lows of the day, we can't really blame asset allocation trading between stocks and bonds. It's easier to blame a mid-day surge in fuel prices (especially after 11am) which may have been related to headlines regarding U.S. missiles striking an oil tanker docked at Kharg Island. All told, it was still a victorious week with yields ending up slightly lower than last Friday. The week ahead is marked by limited data and the pre-FOMC blackout period. Bonds will remain tuned into oil price volatility and potentially to any big swings in stocks. Econ Data / Events Building Permits (Jun) 1.367M vs 1.40M f'cast, 1.41M prev Housing starts number mm (Jun) 1.427M vs 1.31M f'cast, 1.177M prev Import prices mm (Jun) 0.3% vs -0.7% f'cast, 1.9% prev Market Movement Recap 08:46 AM Modestly stronger start despite higher oil/gas. 10yr down 1.9bps at 4.536 and MBS up 1 tick (.03). 12:47 PM Near weakest levels. MBS unchanged and 10yr down 1bp at 4.546 04:12 PM At the weakest levels. MBS down 1 tick (.03) and 10yr down 0.4bps at 4.551