Middle East escalation sends rates running before big jobs report 💣📈👷♂️
The Week Ahead
WEEK AHEAD 🗓️
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There is already enough on the calendar this week to put bonds and mortgage rates on their heels, escalation in the Middle East is not how we wanted things to start.
However, that’s exactly what we had on Monday, sending oil and interest rates higher.
Oil closed above $100 again, after a temporary dip on Friday.
Meanwhile, the U.S. 30-Year Treasury Bond closed above 5%, a level that has been acting as strong support/resistance for the last two decades.
Mortgage rates also retreated, erasing April’s gains, but still have some cushion before testing the March highs.
The rest of the week is packed with the typical reports during an employment data week.
Tuesday starts things off with the “Job Openings and Labor Turnover Survey” (JOLTS), as well as two service sector surveys.
Wednesday is the Monthly ADP payrolls report, followed on Thursday by Challenger Layoffs and Jobless Claims.
Friday’s Non-Farm Payroll (NFP) is the usual headliner and is punctuated by the first University of Michigan Consumer Sentiment survey for the month of May.
Absent a massive miss (lower than expected) on the NFP employment report, this week is unlikely to have a favorable turnaround without positive news from the Strait of Hormuz
RATE LOCK GUIDE 🔒
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The LendZen LOCK-O-METER provides borrowers with a risk-weighted score based on how various macroeconomic events, including market data, central bank announcements, and geopolitics, each historically impacts the price of bonds.
higher risk scores = lean towards locking
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Closing Window
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[ 15 Days ] — 87 🔴
Mortgage rates have given back much of the recent recovery after oil surged above $100 and the 30-year Treasury pushed above 5%. With a full week of employment data (JOLTS, ADP, Challenger, NFP) and ongoing Middle East tensions, short-term risk remains very high.
[ 30 Days ] — 71 🟠
The combination of geopolitical-driven inflation risks, and a stacked jobs calendar, create heavy repricing risk. One “hot” print, or further conflict escalation, could quickly erase any remaining post-March gains which puts this window in high-caution territory.
[ 45 Days ] — 59 🟡
There is more time to absorb the latest dose of volatility, but the labor market reports this week could put longer-term closing windows on their heels too.
[ 60 Days ] — 46🟡
The two-month backdrop is still somewhat supportive, but renewed inflation fears add uncertainty, especially for Spring buyers who are rate/payment sensitive.
If you are already in a strong position locking generally makes the most sense, especially for shorter windows, since the focus should be on making a savvy rate choice based on your longer-term rate outlook.
I expand on this “long game” approach in this Substack post.
Thanks for reading.
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