Author: Eric BernsteinPublished:
Mortgage rates continue to move based on how the conflict unfolds and whether oil prices move higher or lower as a result. When Iran opened the Strait of the Hormuz, we saw mortgage rates fall again, but that relief may be temporary as the Strait was closed again the following day and with the ceasefire set to expire this week, anything could happen.
The average rate on a 30-year fixed rate conventional loan fell to 6.18%, now just 0.25% above the lows we saw in February before the conflict began. See what rates we're offering by signing up for our Friday rate texts.
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Inflation Data Delivers a Pleasant Surprise
Pleasant news on the inflation front, even with the surge in oil prices, wholesale prices came in far better than expected in March. The producer price index increased just 0.5% for the month, well below the consensus estimate of 1.1%. Even more impressive, core PPI — stripping out food and energy — rose only 0.1% against a forecast of 0.5%, and the services side of inflation was completely flat on the month. That's a big win for anyone hoping to see the Fed gain more confidence to cut rates this year.
The import price picture was a little less rosy. Import prices increased 0.8% in March, though that was still well below economist expectations of a 2.4% jump. Energy-related costs from the Middle East conflict were a clear driver, and one economist noted that non-fuel import price increases could hold inflation higher than the Fed wants to see and potentially push off rate cuts.
Bottom line: It's not as bas as anyone thought, at least not yet. A prolonged conflict with elevated oil prices will eventually find their way to consumers.
The Strait of Hormuz: Open and Shut
If you've been trying to keep up with the Strait of Hormuz, you're not alone. It's enough to make your head spin. On Friday, Iran's Foreign Minister declared the waterway open to commercial vessels as part of a 10-day ceasefire between Israel and Iran-backed Hezbollah. By Saturday morning, Iran reversed course entirely, with the IRGC announcing the strait was back under its full control and effectively closed — firing warning shots at ships that tried to pass, including Indian-flagged vessels, forcing tankers from multiple countries to turn around. Then on Sunday, the U.S. seized an Iranian cargo ship that allegedly tried to breach the naval blockade, escalating tensions further and throwing the timing of a new round of talks into question. The back-and-forth is a reminder of something we've seen repeatedly over the past year: geopolitical headlines can move mortgage rates in the short term, even without anything definitive happening.
What to expect this week?
t's a relatively light week on the data front, but there are a few reports that could move markets.
Tuesday is the big day, with retail sales for March coming in — the median forecast is a healthy 1.5% gain, up from 0.6% last month, which would signal that consumers are still spending despite all the uncertainty. Pending home sales for March also drop Tuesday, which is always worth watching for anyone tracking the housing market.
Thursday brings initial jobless claims (forecast at 210,000, roughly in line with last week's 207,000), and the S&P flash PMI readings for both services and manufacturing.Friday closes the week with the final read on April consumer sentiment, currently forecast at 49.0. which is a historically low number that reflects just how rattled consumers are by tariffs, energy prices, and geopolitical uncertainty.
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