Stocks are sharply lower, with Mortgage Bonds down a bit as well, in response to oil prices spiking to nearly $120 per barrel after Iran announced a new leader.
Oil prices were at $65 not too long ago, so to see them almost double is a very difficult situation, and almost all asset prices are selling off. The Strait of Hormuz has been essentially closed, but the latest news is that there is a new leader in Iran, Khamenei’s son, who is anticipated to be a hardliner and digging in his heels. The thought is that things will not be resolved quickly in Iran, causing a big spike in oil prices.
Helping oil prices come down from their peak was an announcement that the G7 is discussing and considering a coordinated emergency oil reserve release, which has helped oil prices settle around $100/barrel, but obviously still very elevated.
At the pump, gasoline prices have risen from under $3/gallon at the start of March to almost $3.50/gallon. Prices are not too far off where they were over the last few years, but it’s a huge change from the beginning of the year. Also worth noting is that based on oil prices today, if they were to stay there, it would portend prices going towards $4/gallon.
ICE Mortgage Monitor
ICE reported that home values rose 0.13% in January, which is the strongest monthly gain in almost a year according to them. Year over year, home values are up 0.4%, but ICE typically has cooler figures than other appreciation reports out there like Case-Shiller, FHFA, and Cotality.
ICE said that it appeared appreciation was starting to reaccelerate with the spring homebuying season, the best affordability in four years, and rates dipping under 6%.
Of course this was before oil prices and rates started to rise in March. But the recent rise in rates underscores the importance of reaching out to your clients to establish a strike rate so you can take advantage of the refinance opportunities when they present themselves, as they have been short lived. Make sure you are using our Strike Rate tool to make things easier, and put in the work now, so that when rates come back down, you can capitalize.
Realtor.com Data
Realtor.com reported that Active Listings in February were flat at 915,000 units compared to January, but the are up 8% year over year. Inventory levels usually begin to rise around this time of year as we head into the spring homebuying season.
Even with the year over year rise, they are still down 17% from February 2019, pre-pandemic, showing that inventory levels are still tight in much of the country.
Days on market were reported at 70, which is down from 78 in January, but up from 66 last February. Days on market typically peaks in January and declines through May.
News This Week
Tuesday: ADP Weekly Employment Data, Existing Home Sales
Wednesday: Mortgage Apps, Consumer Price Index, 10-year Auction
Thursday: Housing Starts, Jobless Claims, 30-year Auction
Friday: PCE Inflation Report, GDP Q4 second reading, JOLTS
Technical Analysis
Mortgage Bonds are trying to hold onto support at 99.60. If this level does not hold, there is a lot of room for Bonds to move lower, roughly 60bp, until the next floor.
10-year yields are testing an important overhead ceiling at the 50-day Moving Average. If this level does not hold, the next stop is 4.20%. We will be listening for news of an oil reserve release from the G7, which could help calm the markets.
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