Granted, it may be far less promising than some of the more conclusive headlines that led up to previous ceasefires and peace memos, but Tuesday delivered at least a modicum of hope that war sentiment is shifting. In not so many words, an Israeli media outlet reported that U.S./Iran mediators are getting closer to re-implementing the previous memo of understanding that paved the way toward more permanent peace. Markets take this with a grain of salt for obvious reasons, but it was enough to lift stocks and cause a small-but-quick drop in oil prices and bond yields. There were no other major market movers in play.
Slightly stronger start. MBS up 3 ticks (.09) and 10yr down 2.5bps at 4.63
10:17 AM
Gaining ground as stocks sell. MBS up 5 ticks (.16) and 10yr down 4.1bps at 4.613
01:36 PM
Off best levels, but still much stronger. MBS up 9 ticks (.28) and 10yr down 5.5bps at 4.599
03:41 PM
Holding most of the rally after hours. MBS up a quarter point and 10yr down 5.2bps at 4.603
Lock / Float Considerations
7/28/26 - More improvement in oil prices and bonds. More re-entry into prevailing trend channel, but not a huge desire for rate sheets to follow the gains. This creates a bit of asymmetric opportunity in favor of floaters heading into Fed day. That said, lenders don't tend to aggressively price in gains on a Fed morning (knowing that the afternoon could be quite volatile). Whatever you decide, keep that potential afternoon volatility in mind.
