Early in the trading session, the bond market began improving in response to more updates on a potential Iran peace deal. When bonds improve, rates fall, but the initial reaction proved short-lived.  Thankfully, the reversal didn’t do any new damage. This allowed the average lender to keep rates right in line with yesterday’s 6.61% for a top-tier 30 year fixed. You’d have to go back to May 14th to see anything lower.

In a Shocking Twist, Bonds Relive Another Groundhog Day

The present week began on a stronger note thanks to news that came out on Monday regarding a U.S./Iran peace deal being within reach. This time around, it was the fact that Iran’s state TV shared a draft of the framework for the memo that serves as the stop-gap peace deal while full details are negotiated. It turns out that this draft wasn’t obviously different from the one referenced on Monday, but markets remain cautiously willing to react to the same repackaged news time and again as if repetition increases the chance that the peace deal will eventually become official. Bonds were a bit more skeptical than oil prices, but ultimately ended the day without losing any ground.

Market Movement Recap

08:27 AM modest overnight gains and some extra buying just now after yet another round of peace deal headlines. MBS up 3 ticks (.09) and 10yr down 3bps at 4.459

10:49 AM sideways volatility. MBS up 3 ticks (.09) and 10yr down 1.5bps at 4.472

It seems that we’ve seen slight variations on the same peace deal news for the past several days. That’s probably because there is an actual peace deal that’s probably near the actual finish line and that’s probably why the market is actually willing to trade it. This morning’s headlines were as simple as any recent example: Iran’s state TV obtained a draft of the peace framework with the key inclusion being a commitment to restoring commercial traffic through Hormuz within one month. Bond yields dropped about 2bps on the news and MBS rallied about an eighth of a point–fairly tame, but clearly connected.

Home prices rose 0.7% annually in March, down from a 0.8% increase in the previous month, according to the S&P Cotality Case-Shiller home price index.

Certain private-label securities may get a lower risk weighting for bank capital and separately, second liens have new uniform guidelines for TRID.

Current CEO Rick Thornberry is retiring as Radian shifts to a multi-line business, with former Mr. Cooper President Mike Weinbach taking over on Aug. 13.

Insurance claims dropped in 2025, but covered loss amounts didn’t follow, largely due to the severity of the Southern California wildfires, Rate reported.

Crude oil futures dropped sharply Sunday, triggering bullish Treasury gaps. The head of correspondent business development at AD Mortgage writes about what it means for yields.

Good Reminder That The Market Gets to Decide What Matters

If oil, Treasuries, stocks, and the rest of the market were completely closed, and if we could only estimate the probable impact of the news that’s been available over the past 3 days, it would be hard to make that case that bond yields should be any lower than they were on Friday. In fact, some of the newswires (the ones citing various military clashes) might lead one to suspect yields should be higher. But here we are with 10s down more than 6bps and MBS up almost half a point just after 3pm ET–a good reminder that the market gets to decide what to make of the available news.

Econ Data / Events

Philly Fed Non Manufacturing

-23.6 vs -13.0 f’cast

Chicago Fed Activity Index

.14 vs -.03

Market Movement Recap

08:43 AM Overnight peace optimism gains holding. MBS up half a point and 10yr down 8bps at 4.482

11:02 AM Off best levels. MBS up 3/8ths and 10yr down 5.6bps at 4.502

02:45 PM Modest recovery. MBS up 14 ticks (.44) and 10yr down 6.1bps at 4.498

The shift gathered pace at the most recent policy meeting in April, when three voters on the Federal Open Market Committee voted against the decision to hold rates steady.