Recap
Friday saw mortgage bonds improve through the late morning, then give it all back as the day went on. Some lenders repriced better before the reversal, but not too many. Friday was the first sign of positivity in a week, but there was a lot of risk heading into the weekend that further escalation in the Middle East could drive rates higher.
Rate outlook for today...
Rate sheets today will be better, as Middle East tension ease and the U.S. and Iran have paused military strikes since Friday. That is helping lift global stock and bond markets and pushing down oil prices. President Trump is giving diplomacy "some space" after last week threatening to intensify strikes against the Islamic Republic. The reversal in stance could help rates continue to ease lower this week if negotiations continue. For today, reprice risk is low... the only thing that would cause bonds to reverse from early improvements and sell off would be a return to military strikes and a breakdown in talks.
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