There is little chance of any significant movement lower for rates if there isn’t progress with negotiations between the US and Iran. Last week optimism was high, crude oil declined. The 10 year note -11 bps in rates, the 2 year -11 bps; FNMA 5.5 30 year coupon +61 bps, crude dropped $9.00/barrel. This morning with no progress the 10 year note increased 3 bps overnight, crude oil increased $3.50; both found some relief when US trading began, but by 9:30 am ET crude oil added more losses pushing US rates higher. (see below)
We have key data this week on employment.
This week’s calendar:
Monday:
May ISM manufacturing index.
Tuesday:
April JOLTS job openings.
Wednesday:
Weekly MBA mortgage applications, May ADP private payrolls (+118K from +109K in April), May ISM services sector index, the Fed’s Beige Book.
Thursday:
Weekly jobless claims 212K from 215K the prior week, May Challenger, Grey, and Christmas job cuts, Q1 productivity and unit labor costs.
Friday:
May employment data (NFP jobs +85K from 115K in April, private jobs +90K from 123K, the unemployment rate 4.3% unchanged from May, average hourly earnings month/month +0.3% from +0.2% in April).
PRICES @ 10:00 AM
10 year note: 4.50% +6 bps
5 year note: 4.22% +7 bps
2 year note: 4.08% +7 bps
30 year bond: 5.02% +5 bps
30 year FNMA 6.0: @9:30 am 101.96 -15 bps (-11 bps from 9:30 am Friday)
30 year FNMA 5.5: @9:30 am 100.2 -24 bps (-21 bps from 9:30 am Friday)
30 year GNMA 6.0: @9:30 am 101.78 -1`0 bp (-8 bps from 9:30 am Friday)
Dollar/Yen: 159.71 +0.43 yen
Dollar/Euro: $1.1621 -$0.0041
Dollar Index: 99.23 +0.33
Gold: $4,496.00 -$97.00 (strong dollar)
Bitcoin: 71,51 -1935
Crude Oil: $92.77 +$5.41
DJIA: 50,964 -68
NASDAQ: 26,953 -19
S&P 500: 7576 -4
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.
The belief that a deal with Iran about opening the Strait of Hormuz appears to be gaining traction. Crude oil prices are down over $20.00 a barrel from its high, down $12.00 in the last five sessions, this morning its price began -$1.26 to $88.00.
Yesterday MBS prices increased 20 bps from Wednesday. Inflation edged up on the April PCE inflation release yesterday.
At 9:45 am the only data today, May Chicago purchasing managers index jumped to 62.7 with forecasts at 51.2 and up from 49.2 in April.
With the weekend markets should trade quietly today.
10 year note: 4.45% unch
5 year note: 4.16% unch
2 year note: 4.03% unch
30 year bond: 4.99% +1 bp
30 year FNMA 6.0: @9:30 am 102.08 +2 bp (+23 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 100.43 +6 bp (+31 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.86 -1 bp (+8 bp from 9:30 am yesterday)
Dollar/Yen: 159.28 +0.03 yen
Dollar/Euro: $1.1648 -$0.0003
Dollar Index: 99.00 -0.02
Gold: $4,565.60 +$33.20
Bitcoin: 73,135 -172
Crude Oil: $87.32 -$1.53
DJIA: 50,864 +195
NASDAQ: 27,074 +157
S&P 500: 7594 +31
At 8:30 am a number of important data points. April PCE inflation month/month was better than forecasts; month/month overall expected +0.5% increased 0.4%, core PCE month/month thought to be +0.3% increased 0.2%. The year/year overall PCE expected +3.8% was reported +3.8% but increased from +3.5% in March; year/year core at 3.3% as expected but up from 3.2% in March. Inflation steady but not increasing as many have expected.
Weekly jobless claims thought to be at 213K reported at 215K up 5K from the previous week. Continuing jobless claims rose by 15,000 to 1,786,000 on the second week of May, in line with expectations of 1,780,000. Claim counts remained firmly below averages from the previous year and extended the period of stability since the declines in initial claims in the last months, maintaining the backdrop of a robust labor market.
April personal income was unchanged from March with forecasts of +0.4%; personal spending estimates at +0.5% hit the target, +0.5% $111.1B, slowing from an upwardly revised 1% gain in March and matching market expectations, Energy prices increased $28.8B.
April durable goods orders increased 7.9% with estimates at +2.8% month/month. Ex transportation orders +1.1% with estimates at +0.4%. It is the strongest increase in new orders since May 2025, mainly reflecting higher demand for transportation equipment (+21.5%).
Finally, at 8:30 am the second look at Q1 GDP, the initial report had growth at 2.0%, expectations were at +2.1% but declined to +1.6%; Q4 GDP was +0.5%.
At 10 am April new home sales, expected at 662K reported at 622K. Details this afternoon.
At 1 pm $44B 7 year note auction.
10 year note: 4.49% unch
5 year note: 4.19% +1 bp
2 year note: 4.05% +1 bp
30 year bond: 5.01% unch
30 year FNMA 6.0: @9:30 am 101.85 -5 bp (-6 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 100.12 -6 bp (-12 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.78 +3 bp (+3 bp from 9:30 am yesterday)
Dollar/Yen: 159.42 -0.10 yen
Dollar/Euro: $1.1649 +$0.0014
Dollar Index: 99.17 -0.03
Gold: $4,453.70 +$5.30
Bitcoin: 72,773 -2141
Crude Oil: $90.97 +$2.29
DJIA: 50,531 -114
NASDAQ: 26,655 -20
S&P 500: 7520 unch
Crude dropped $3.00 yesterday. This morning more follow through, crude down another $6.00. No announced agreement with Iran but the decline in oil prices suggests there will be a deal. Reports this morning that Iran would restore traffic through the Strait of Hormuz as part of a framework deal with the US.
MBA reported mortgage applications fell 8.3% last week. The decline was a big drop in re-finances, down 18.1%, purchase applications slipped 0.4%.
This afternoon at 1 pm Treasury will auction $70B of 5 year notes, yesterday’s 2 year auction met with good demand.
Crude has been falling quickly over the last five sessions, stabilizing gas prices and lessening inflation estimates.
10 year note: 4.47% -2 bp
5 year note: 4.16% -2 bp
2 year note: 4.04% -1 bp
30 year FNMA 6.0: @9:30 am 101.91 +2 bp (+7 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 100.24 +8 bp (+7 bp from 9:30 am yesterday)
30 year GNMA 6.0: @9:30 am 101.75 -3 bp (+4 bp from 9:30 am yesterday)
Dollar/Yen: 159.40 +0.10 yen
Dollar/Euro: $1.1643 +$0.0011
Dollar Index: 99.09 -0.08
Gold: $4,415.50 -$86.80
Bitcoin: 74,797 -1108
Crude Oil: $89.67 -$4.22
DJIA: 50,655 +193
NASDAQ: 26,609 -47
S&P 500: 7517 -2
Lower
Neutral
Not a recession, just the wrong layoffs
While the perpetual saying in real estate is “location, location, location,” increasingly the more telling variable is occupation, occupation, occupation.
According to Realtor.com’s Allaire Conte, a new report from John Burns Research & Consulting, authored by John Macke, identifies a quiet but consequential shift in the job market — one with direct consequences for housing. Most major metros are still adding jobs, but the growth is tilting toward lower-wage fields like education and healthcare. Meanwhile, the sectors that actually drive homebuying — tech, finance, and professional services — are contracting. And that distinction matters enormously.
Here's why. A household today needs roughly $120,000 in annual income to afford a median-priced home. The typical American household earns about 46% less than that. Which means the buyer pool was already thin. Now? It's getting thinner.
"These job losses directly shrink the pool of qualified buyers," Macke writes. When high earners lose jobs, they don't just stop buying homes — they stop qualifying for mortgages entirely at current prices and rates.
Realtor.com senior economist Joel Berner puts it plainly: a decline in high-end employment leads to softness in the for-sale market, showing up as low or negative price growth. You don't need a recession. You just need to lose the wrong jobs.
Austin is the starkest example. A tech hiring slowdown colliding with a construction boom created a double shock — demand weakening just as supply flooded the market. Median asking rents are down 7.2% year over year. Listing prices have dropped 5.7%. Denver tells a similar story, with rents off 5.9% and listing prices slipping 1.6%.
The Bay Area is more complicated. Rents are still rising slightly in San Francisco (up 1.6%) and San Jose (up 2.2%), but listing prices are falling — down 4% in San Francisco, nearly 1% in San Jose. High-income renters are holding their ground. High-income buyers are not.
Charlotte stands apart. The city is still adding professional services jobs at a strong pace, and the numbers reflect it. Active listings jumped 36.5% year over year — second highest in the country — yet prices still rose 2.1%. More supply, but enough qualified demand to absorb it. Macke calls it a "rare bright spot," and the data backs him up.
On the rental side, October marked the 27th consecutive month of monthly rent declines nationally, with median asking rents down 1.7% year over year. Yet renter demand hasn't collapsed. The reason, Macke suggests, is that the jobs being created are renter-wage jobs, not buyer-wage jobs. The market isn't shrinking — it's sorting.
Conte maintains that the cooling now underway isn't your typical recession story. It's quieter and more surgical than that. The economy isn't broadly failing. It's just failing the people the housing market depends on most.
Realtor, TBWS
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Lower
Mortgage rates are moving lower today. The MBS market worsened by -4 bps last week. This was not enough to increase mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Neutral
These are the three things that have the greatest ability to impact rates this week. 1) Geopolitical, 2) Inflation and 3) The Fed.
1) Geopolitical: Hopiem had a very large impact on rates last week and we start off this week the same way as market hedging towards a deal with Iran.
2) Inflation: The Fed's key measure of Inflation, Core PCE will hit on Thursday and is expected to increase 0.3% on a MOM basis and to 3.3% on a YOY basis. The higher this number is, the worse it is for rates and vice-versa.
3) The Fed: Now that new Fed Chair Warsh has been installed, he is rolling up his sleeves and getting to work. We will have plenty of talking Fed's this week, and the bond market will continue to focus on handicapping when the new regime will start to hike.
This Week's Potential Volatility: High
This morning markets are seeing a big boost on geopolitical hopes. Volatility has started high with potential to stay that way all week.
Bottom Line:
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Markets continue to focus on Iran and the possibility of some kind of breakthrough. Some news outlets saying a deal has been largely agreed to. Optimism within markets is high. The 10 year note at 8 am ET down 7 bps from last Friday to 4.49%, crude oil down $4.00, MBSs began 17 bps higher than last Friday, and stock indexes higher.
Some key economic reports this week. Today the May Conference Board consumer confidence index (92.0 from 92.8), $69B 2 year note auction. Wednesday $70B 5 year note auction. Thursday weekly claims (213K from 209K), Q1 GDP second look (+2.1% from +2.0% on the first look. April durable goods orders (month/month +2.8% from +0.8% in March). April PCE inflation (month/month +0.5% from +0.7% in March, year/year +3.8% from 3.5%); core PCE ex food and energy (month/month +0.3% unchanged from March, year/year +3.3% from 3.2%). April personal income (month/month +0.4% from +0.6%, personal spending +0.5% from +0.9%). April new home sales (662K from 682K). $44B 7 year note auction. Friday May Chicago purchasing managers index (51.2 from 49.2).
March Case/Shiller home price index -0.2% with estimates of +0.1%.
May Conference Board consumer confidence index thought to be 92.0. The Conference Board Consumer Confidence Index dipped 0.7 points to 93.1 (1985=100) in May, down from an upwardly revised 93.8 in April. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—retreated by 3.2 points to 121.2. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—rose by 1.0 points to 74.4. The survey period for this month’s preliminary results was May 1–19, encompassing the ongoing war in the Middle East that is placing upward pressure on prices globally.
It has been a volatile month of May, on 5/7 the 10 year note at 4.39%, on 5/19 4.67%, now 4.49%.
10 year note: 4.49% -7 bp
5 year note: 4.19% -7 bp
2 year note: 4.06% -7 bp
30 year bond: 5.02% -5 bp
30 year FNMA 6.0: @9:30 am 101.82 +14 bp (+13 bp from 9:30 am Friday)
30 year FNMA 5.5: @9:30 am 100.17 +28 bp (+21 bp from 9:30 am Friday)
30 year GNMA 6.0: @9:30 am 101.71 +11 bp (+11 bp from 9:30 am Friday)
Dollar/Yen: 159.26 +0.35 yen
Dollar/Euro: $1.1630 -$0.0012
Dollar Index: 99.13 -0.10
Gold: $4,526.20 +$3.00
Bitcoin: 76,817 -567
Crude Oil: $93.13 -$3.47
DJIA: 50,657 +78
NASDAQ: 26,620 +276
S&P 500: 7525 +52
Overnight crude oil increased $3.00 but by 8:30 am ET back to unchanged from yesterday. This is a long weekend; markets closed on Monday with the bond and mortgage markets closing today at 2 pm.
Not expecting that the US will launch military strikes over the Memorial Day holiday.
The only data today, the final University of Michigan consumer sentiment index, expected at 48.2 unch from mid-month.
10 year note: 4.55% -2 bp
5 year note: 4.24% -1 bp
2 year note: 4.10% +1 bp
30 year bond: 5.08% -1 bp
30 year FNMA 6.0: @9:30 am 101.69 +7 bp (+31 bp from 9:30 yesterday)
30 year FNMA 5.5: @9:30 am 99.90 +14 bp (+52 bp from 9:30 yesterday)
30 year GNMA 6.0: @9:30 am 101.06 +2 bp (+21 bp from 9:30 yesterday)
Dollar/Yen: 159.12 +0.13 yen
Dollar/Euro: $1.1603 -$0.0015
Dollar Index: 99.26 unch
Gold: $4,519 -$23.50
Bitcoin: 77,100 -510
Crude Oil: $97.23 +$0.92
DJIA: 50,664 +275
NASDAQ: 26,400 +107
S&P 500: 7487 +41
Crude oil fell $6.00 yesterday on optimism over the Strait, this morning oil up $3.00.
April housing starts thought to be 1.410 million increased to 1.465 million. Permits expected 1.380 million jumped to 1.442 million. Starts were down 2.8%% month-on-month. Single-family starts were down 9% to 0.93 million, while multi-family starts jumped 14.3% to 0.529 million. Building permits increased 5.8% month-over-month. Multi-family permits, including buildings with five or more units, surged 21.8% to 570,000, while single-family permits declined 2.6% to 872,000.
Weekly jobless claims -3K to 209K with estimates at 212K. Continuing jobless claims, a proxy for outstanding unemployment, rose by 6,000 to 1,782,000, slightly under the expectations of 1,790,000.
10 year note: 4.60% +2 bp
5 year note: 4.28% +2 bp
2 year note: 4.10% +4 bp
30 year bond: 5.13% unch
30 year FNMA 6.0: @9:30 am 101.38 -12 bp (-5 bp from 9:30 am yesterday)
30 year FNMA 5.5: @9:30 am 99.44 -26 bp
30 year GNMA 6.0: @9:30 am 101.39 -7 bp
Dollar/Yen: 159.31 +0.39 yen
Dollar/Euro: $1.1580 -$0.0045
Dollar Index: 99.47 +0.38
Gold: $4,496.90 -$38.40
Bitcoin: 76.670 -934
Crude Oil: $102.23 +$3.97
DJIA: 49,995 -15
NASDAQ: 26,175 -95
S&P 500: 7417 -16
This morning rates began a little better. No change in underlying issues.
Weekly mortgage applications declined 2.3% last week, purchase applications -4.1%, re-fis -0.1%. ARM applications increased 10% last week.
At 1 pm ET Treasury will auction 20 year bonds. At 2 pm the minutes from the FOMC April meeting.
At 9:30 am the DJIA opened +117, NASDAQ +120, S&P +22. 10 year note 4.66% -1 bp. FNMA 6.0 30 coupon +8 bps from yesterday’s close and +5 bp from 9:30 am yesterday.
10 year note: 4.65% -2 bp
5 year note: 4.31% -2 bp
2 year note: 4.12% -1 bp
30 year bond: 5.17% -1 bp
30 year FNMA 6.0: @9:30 am 101.33 +8 bp (+5 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 103.40 +5 bp
30 year GNMA 6.0: @9:30 am 103.95 +2 bp
Dollar/Yen: 159.05 -0.05 yen
Dollar/Euro: $1.1599 -$0.0009
Dollar Index: 99.38 +0.06
Gold: $4,489.20 -$22.00
Bitcoin: 77,006 +253
Crude Oil: $102.10 -$2.14
DJIA: 49,471 +107
NASDAQ: 25,979 +108
S&P 500: 7378 +25
Rates are being hampered by the continuing increase in the dollar, new reports show China reduced its holdings to $652.3B, down roughly 6% from February to the lowest level since September 2008. Japan, the single largest foreign holder of U.S. government debt, dropped approximately $47B to $1.191 trillion. Overall foreign holdings fell to $9.25 trillion in March from $9.49 trillion in February. Under it all is the Iran situation.
ADP out with its monthly private jobs, private employers added 42,250 jobs a week in the four weeks ended May 2nd, up from 33K a week in April.
Bloomberg said the 30 year bond yield is the highest since the global financial crisis in 2007, at 5.18%.
April pending home sales at 10 am thought to be up 0.9% from March’s +1.5% improvement, sales increased 1.4%.
10 year note: 4.65% +6 bp
5 year note: 4.31% +7 bp
2 year note: 4.11% +5 bp
30 year bond: 5.17% +4 bp
30 year FNMA 5.5: @9:30 am 99.24 -33 bp (-53 bp from 9:30 am yesterday)
30 year FNMA 6.0: @9:30 am 101.28 -23 bp (-36 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 99.66 -26 bp (-44 bp from 9:30 am yesterday)
Dollar/Yen: 159.11 +0.27 yen
Dollar/Euro: $1.1610 -$0.0048
Dollar Index: 99.33 +0.14
Gold: $4,482.50 -$75.80
Bitcoin: 76,686 -147
Crude Oil: $108.90 +$0.24
DJIA: 49,432 -254
NASDAQ: 25,870 -220
S&P 500: 7360 -43