Author: Eric BernsteinPublished:
Last week was a pretty good one for homebuyers, with mortgage rates finally ticking lower, but the relief may be short-lived. This week brings Trump's Tuesday deadline for Iran to reopen the Strait of Hormuz, PCE inflation data on Thursday, and a potentially market-moving CPI report on Friday. There's potential for a big rate move in either direction so we'll see what happens.
The average rate on a 30-year fixed rate conventional loan jumped to 6.38%, a significant dip from the 6.49% last week. See what rates we're offering by signing up for our Friday rate texts.
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Mixed Jobs Data
The latest labor data paints a mixed picture. Headline numbers look better than feared for most reports, but the underlying details tell a more cautious story.
Job openings fell more than expected in February, dropping to 6.88 million, while hiring sank to its lowest level since the start of the COVID-19 pandemic. The reluctance of employers to commit to either large-scale hiring or layoffs has created what Powell described as a stagnant equilibrium with meaningful downside risk.
ADP reported that private sector employers added 62,000 jobs in March, beating expectations of 40,000, with education and health services leading the way at 58,000 new positions. However, large and mid-sized businesses actually shed workers, with smaller firms carrying the entire load.
Friday's official jobs report showed nonfarm payrolls rising 178,000 — the largest gain in 15 months. As usual Health care accounted for more than half of March’s job growth, adding roughly 90,000 jobs in the month, followed by leisure and hospitality (44,000). The unemployment rate also had a surprise decline to 4.3%, which largely driven by 396,000 people dropping out of the labor force entirely (not good), pushing the participation rate below 62% for the first time since the pandemic.
Take Friday's headline number with a grain of salt. We've seen over the years that the Bureau of Labor Statistics has a habit of revising these figures sharply lower. 2024 saw a downward revision of 818,000 jobs, and 2025 followed with a 584,000 reduction. This month's blowout numbers may look quite different six months from now. The issues that we've seen in the labor market still exist and they didn't magically disappear overnight.
Retail Sales Data Was Hot
February retail sales beat expectations, rising 0.6% after a slow January — and the gains were broad, with 10 out of 13 categories posting increases. Auto sales bounced back after a tough winter. Wages are still growing faster than inflation and bigger tax refunds helped put more money in consumers' pockets, which means consumers had more discretionary income to push spending. The catch: this data is from before the Iran war started pushing gas prices above $4 a gallon, so the March numbers could tell a very different story.
Trump's Tuesday Ultimatum for Iran
The biggest wildcard for mortgage rates this week (as we've seen the last few weeks) is the Iran war.
Over the weekend, Trump issued a deadline for Iran to reopen the Strait of Hormuz by Tuesday at 8pm ET, threatening to bomb Iranian power plants and infrastructure if they don't comply. Iran rejected a temporary ceasefire and is demanding a permanent end to the war before the waterway reopens. Iran rejected a temporary ceasefire and is demanding a permanent end to the war before the waterway reopens. Shipping traffic through the Strait, which normally carries 25% of the world's seaborne oil, is essentially closed. If
Why does this matter for mortgage rates? Tariff threats and geopolitical uncertainty push Treasury yields higher as investors demand more compensation for inflation risk, and mortgage rates follow the 10-year Treasury. The 10-year yield has already climbed from 3.96% before the conflict to 4.36% as of this morning. We saw this same pattern play out repeatedly in 2025 with tariff headlines — rates spike on the news, then settle back down once the dust clears.
Why it matters for mortgage rates comes down to how this plays out. If Iran reopens the Strait, oil prices would likely drop quickly, inflation concerns ease, and mortgage rates would follow. If Trump follows through on striking Iranian power plants and energy infrastructure, the opposite happens — a broader energy crisis, higher inflation expectations, and rates that could move meaningfully higher.
What to expect this week?
Beyond the Iran deadline, there's a packed economic calendar that could add to rate volatility.
Thursday is the biggest data day, with PCE — the Fed's preferred inflation gauge — expected to come in at 2.8% year over year. Given that this data covers February, it predates the Iran war's impact on energy prices, so markets will be reading it carefully for the underlying inflation trend before oil prices started surging.
Friday brings the March CPI report, and this one is more important. Forecasts are calling for CPI to jump to 3.3% year over year, up sharply from 2.4% the month before, with monthly CPI expected at 1.0%. If that number comes in at or above expectations, it will add upward pressure on rates at an already volatile time. A softer reading would be a welcome relief.
We also get FOMC minutes on Wednesday and several Fed speakers throughout the week, including Fed Vice Chair Philip Jefferson on Tuesday and San Francisco Fed President Mary Daly on Wednesday. Markets will be listening closely for any signals on how the Fed is thinking about the Iran war's inflation impact and whether rate cuts are still on the table for 2026.
The bottom line: between the Iran deadline Tuesday night and PCE and CPI reporting this week, the ingredients are there for a meaningful rate movement in either direction.
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