Do Rates Follow Oil Prices As They Move Higher?

What's Happening Today

Stocks and Mortgage Bonds are continuing lower this morning as the oil crisis remains the dominant force in financial markets. Oil prices have climbed back near $94 per barrel even after the International Energy Agency announced that roughly 400 million barrels could be released from global reserves. Continued attacks on ships in the Persian Gulf and concerns around the Strait of Hormuz are pushing oil prices higher and increasing inflation fears in the bond market.

Oil Prices Continue Driving Market Pressure

• Stocks and Mortgage Bonds are both trading lower this morning
• Oil prices have climbed back near $94 per barrel
• The International Energy Agency announced that 400 million barrels could be released from reserves
• Additional attacks on ships in the Persian Gulf added to market concerns
• The U.S. has indicated it is not yet ready to escort ships through the Strait of Hormuz

While additional oil supply may eventually help stabilize prices, it may take time for reserve releases to reach the market, keeping pressure on inflation expectations.

Treasury Auctions Could Influence Markets

• A 30-year Treasury auction will take place at 1:00 PM ET today
• Demand at these higher yield levels will be closely watched by markets
• Yesterday’s 10-year Treasury auction was met with average demand

Strong demand could help stabilize bond markets, while weaker demand may push yields and mortgage rates higher.

PCE Inflation Report Preview

• The BEA will release the Personal Consumption Expenditures report tomorrow morning at 8:30 AM ET
• The latest readings show headline inflation at 2.9%
• Core inflation is currently at 3%
• Markets expect headline inflation to remain near 2.9% or dip slightly to 2.8%
• Core inflation could remain at 3% or increase slightly to 3.1%

The PCE report measures inflation for January and may not fully reflect the impact of the recent surge in oil prices.

Housing Starts Driven by Multi-Family Construction

• Housing Starts unexpectedly increased in January
• The increase was driven primarily by multi-family construction
• Multi-family starts jumped 30% in the report
• Single-family starts declined
• Building permits fell for both single-family and multi-family projects

While the jump in multi-family construction boosted the headline number, lower permit activity suggests future housing supply growth may slow.

Jobless Claims Remain Low

• Initial Jobless Claims fell by 1,000 to 213,000
• Continuing Claims declined by 21,000 to 1.85 million

Claims remain relatively low overall, suggesting the labor market is still stable despite broader economic uncertainty.

Final Takeaway

Oil prices remain the primary driver of financial markets, pushing stocks lower and keeping pressure on mortgage rates. Even though inflation readings and labor market data show some stability, continued geopolitical tensions and energy volatility are influencing rate movements in the short term.

For homebuyers, homeowners considering refinancing, and real estate professionals guiding clients through today’s market, understanding how global events influence mortgage rates is critical. If you want to review how current market conditions may impact your home financing strategy, reach out anytime to discuss your options.