Oil prices, mortgage rates and jobs week

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the 10-year yield, mortgage rates and jobs week.  Related to this episode:  Treasury yields hit 2026 peak, but spreads keep mortgage rates below 7%  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  HousingWire AI Summit – August 11  HousingWire Mortgage Banking Summit – October 1  More info about HousingWire  Top 5 Trending  Zillow to lay off 500 staff in restructuring  Vishal Garg steps down at Better, board names Daniel Lewis interim CEO  Treasury yields hit 2026 peak, but spreads keep mortgage rates below 7%  The missing piece of America’s new housing strategy  An emerging source of affordable housing supply  Want more from Sarah? Don’t forget to subscribe!  The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:10Welcome, everyone. I'm here with my podcast partner lead analyst Logan Motoshami to talk

00:16about the 10-year yield and mortgage rates and jobs week. Before we dive in, here are the top

00:20five trending stories on housingwire.com. First is the news that Zillow is laying off 500 of its

00:26staff in restructuring, followed by Vishal Garg steps down at better, and the board names Daniel

00:31Lewis, the interim CEO. Then we have treasure yields hit 2026 peak, but spreads keep mortgage

00:37rates below 7%, and the missing piece of America's new housing strategy. Finally, we have an emerging

00:46source of affordable housing supply. Okay, we're ready to go. Logan, welcome back to the podcast.

00:52Do we really have a source of affordable housing? You know, I just want to say, one of the things

00:59I do at events, I go, I want to raise a hand of anybody who's seen what an affordable house

01:05looks

01:05like. Because I actually don't believe in the concept. One of the reasons why housing keeps

01:12going up is because of wages, right? Household incomes and everything. If you don't have

01:15household incomes to grow and the affordable housing, of course, I live in Irvine, California,

01:20which is a little bit different. I love the video you sent to me about the guy hating on Irvine

01:25so

01:25much. He basically described it. I think it's the greatest city on earth, but it's not for everyone.

01:31But everything seems affordable to me around the country, right? But, you know, in some places,

01:39affordable housing is, you know, too expensive for people. In other places, it's the cheapest thing

01:44ever. So wages and incomes and these things have to grow. Mortgage rates move up and down. Prices

01:51move on down. But affordable housing is really based on what the person makes rather than a

01:56generalization. This is why, in theory, it doesn't really exist. Like, unless the national data, like,

02:02you know, housing was, as a country, was more affordable from 2010 to 2019, right? Because for the

02:08first time in decades, home prices fell and mortgage rates got to all-time lows. But, you know, that

02:13changed, of course, when COVID and taxes went up and prices went up and rates went up, very similar to

02:19the late 1970s, early 80s. But affordable, I always thought something else. I digress.

02:26You do digress, but it's a good point because a lot of times affordable housing is subsidized

02:30housing, which is really not single-family, you know, homes that we usually talk about to our

02:35audience. But you never know. I mean, manufactured housing can fall in there. There's lots of stuff.

02:41You'll have to go read the article, Logan, and tell me what you think.

02:45Definitely will do that, Sarah.

02:47Okay. Well, let's dive in. Ten-year yield. Let's talk about the whole economic picture

02:52right now with oil prices and everything. Well, another day of, you know, maybe this deal gets

02:59through. There's a little bit different language now from Iran and Oman. It's just, this is a time

03:07issue now. Again, clearly, whatever the strategy was going into Iran did not work. Okay. We just,

03:15we call a spade as a spade, right? So, basically, we're going into month six and the White House is

03:21asking, does anybody have any ideas on how to pressure? This is one of the differences when you

03:27deal with someone that has home court advantage, right? We talked about this months ago, like,

03:31you know, can they just wait things out? And if you do believe in the missile story that we just

03:37basically shot so many missiles that we're, we have shortage, but now it's a little bit more

03:42complicated because the South Houthis can fire, you know, all of the bases near in the Middle East are

03:52at risk. So, if you go to this next stage, because people say Trump's just taco-ing, right? This,

03:57you know, he talks about these big things and then he pulls it back. Well, he did two weeks of

04:01fighting.

04:02I just don't think he, he's so used to bully ball that it's just, this is weird for him that

04:07people

04:07aren't, you know, coming to the table and stuff like this. So, it's August, midterms are coming up,

04:14and if you escalate this, Iran, they've all shown that they can target energy and then things will

04:21get bad. So, hopefully, hopefully because of the inventory issue, the missile, whatever it is,

04:28there's some closure to it. And what happened today? Ten-year yield, 462, right? Noticeable

04:35movement. And just remember, on days where the bond market might move aggressively lower,

04:40the spreads might not improve. They might get worse because the spreads are here to compress

04:44volatility. So, we saw this in February where yields were falling, but people thought,

04:50well, the spreads aren't getting better. Well, you know, again, spreads are here just to make things

04:56with less early payoff for us. But the conflict, 1.0, 2.0, the 10-year yield really moves,

05:03it's really volatile days around that, more than the Federal Reserve. The Federal Reserve itself has

05:09gotten hawkish, right? If oil prices got down to $70 again, it's not like the 10-year yields at four,

05:16four and a quarter, or anywhere of that, because the Federal Reserve has shifted policy from rate

05:21cuts to rate hikes. So, that's a big thing. You can move the curve up in pricing. But again, just

05:28another usual response that we see. And this is why I say it's hard for mortgage rates to get above

05:347%. It's hard for the 10-year yield to really go much higher because so much is priced in that

05:40if

05:40you get any kind of positive news on the conflict, bond yields should fall. They're not at four,

05:46they're not at 4.10 or four and a quarter, but taking that next leg higher will require the

05:52conflict to get worse and the Federal Reserve getting even more hawkish than what they're talking

05:58about now. I think the mortgage spreads can be confusing because they do buffer for volatility on

06:03both sides. But what moves it? What makes it worse? Because we can seemingly have some giant

06:10thing happening on the global scale and they don't move at all. And then something like today where

06:14it's like, well, shouldn't they go down? Shouldn't they compress? So, we've had a move up higher in

06:20rates. Again, early payoff risk. When rates go lower, remember March 9th, 2020, COVID.

06:28The first Monday on COVID, the 10-year yield was 0.32%. And my first tweet wasn't about anything. I

06:40was like, oh, we're about to have a mortgage market meltdown. So, everybody thought it was like a 2008

06:45thing. I said, no, no, no, early payoff risk. I mean, just the rates collapsed so much that everyone

06:52was at a payoff risk right now. The whole business model of mortgages and hedges and all that went away.

06:58Basically, it was terrible. So, rates actually fell 1%. And then throughout the week, I think it went

07:03up 1% because the volatility was, you just have too much early payoff risk. So, when the 10-year

07:11yield is coming a little bit low, spreads just get a little bit worse, nothing big. But the history of

07:16mortgage spreads is usually when the Fed gets in a very aggressive rate hike cycle, spreads can get worse,

07:22right? Because rates are going to go up and people need to be compensated for higher rates because if

07:27they give you money for a mortgage and it gets refinanced, you're out of luck, right? And there's

07:33no prepays anymore also. And then second of all, if there's a credit issue, right? Silicon Valley

07:39banking crisis, credit issues, spreads got worse. In the mid-1980s, we had credit issues, spreads got worse.

07:47That was actually the last time. The last times how we tracked mortgage spreads were above 3%. It was

07:521986 and 2023, right? Both those two were credit related. The Federal Reserve was hiking still in

08:002023, too. So, you had a lot of drama. And then sometimes when you have a very fast recession,

08:08COVID, of course, and the great financial recession spreads got worse. Why early payoff risk? People

08:12losing their jobs. If you lose your job, you're not paying your mortgage, you need to be compensated.

08:18So, the spreads is very geeky and nerdy. It's something not a lot of people talk about. There's

08:24not really like a textbook, but if you follow markets and you study it, it's your thing. But

08:33it's very important still that mortgage spreads are closer to normal now in 2026 than it was in the

08:40last few years. So, you feel like where we are with the bond market is because of oil prices?

08:45Yes. Every time there is a positive conflict news, bond yields go down, right? So, every time there's

08:52a really bad, like, Iran conflict peak 1.0, 10-year yield got to 468. Why? Because you're worried about

09:00escalation. 2.0, you're worried about escalation. Trump's talking about bombing infrastructure and

09:07energy sites. That means oil prices could go up to 150, 200, and we're in a protracted war for a

09:13year. It's crazy to say that, but that's where the bond market's okay. The Fed's like, we don't like

09:19this. We're going to hike rates. But when it's better, bond yields fall down. So, we would not

09:25have been here with a 10-year yield if the conflict was... If there was no war, the bond market

09:32would

09:32have acted different. I thought we could get up to 460 if the economic data got better. An inflation

09:38state firm. Not the case. Without this conflict, you don't have this. And you don't have the Federal

09:43Reserve making this a part of their policy. Another shock, an energy shock, a diesel shock, fuel, you

09:50know? So, hopefully, this comes to an end. And then we get back to normal. I just don't... I don't...

09:56I

09:57don't know. Like, I could totally see this. Like, you know, everybody's, okay, the straights are

10:00moves in three months down the line, whatever, after the midterms. And then, you know, Iran doesn't

10:07want to do anything with his nuclear. Trump goes back in. But for now, just, you know, what we've

10:12seen in the data is a 10-year yield acts very, very negative, has very, very volatility with the

10:17Iranian conflict headlines, but tends to act better. And, of course, oil prices are at levels to where

10:24people thought the 10-year yield should be much lower rates because people think oil prices in 10...

10:29Just remember, the Federal Reserve hiked the policy from rate cuts to rate hikes. So, the whole shift

10:37of the curve is higher now. You can follow the two-year yield for that as well. That gives you

10:42a better visual on, you know, looking out for rate hikes to happen. And so much is already priced in

10:49right now that you need the conflicts to get worse and worse and worse to get much higher.

10:54We have really a double whammy situation. We've got the Fed being more cockish, and we still have

11:00uncertainty and volatility in the Iran conflict. So, if that could just resolve, we'd all be in a better

11:07position.

11:07Well, it would be. But I would say, number one, the labor data getting better was the worst thing for

11:13rates.

11:13Okay? So, labor over inflation, both ways. All right? And, you know, this is going to be today's topic,

11:18job openings and jobs a week. But then inflation was hotter than what people wanted to see, and then

11:24the conflict happened. So, labor data, Fed got hawkish, Iran conflict dragged on longer than

11:30anybody, and we're at 2.0 stage. I mean, think about it. Could anybody have comprehended a six-month

11:37conflict with Iran, right? With oil prices, Brent crude getting above 100 twice, twice. And mortgage

11:45rates still didn't get above 7%, right? You know, because of the spread. So, we just got to,

11:50whatever happens within a calendar year, we have to just dive into it and try to make as much sense

11:56as rather than run away from it, right? Gangs in New York, blood's on the blade. We never look away,

12:02right? You know? So, yeah. So, that's what I see how the bond market reacts. So, the bond yields

12:09falling and stocks being up is a function of hopefully this conflict comes to an end.

12:15Okay. Well, let's talk about jobs because it is Jobs Week with all this other stuff going on. What

12:20have we seen so far? So, job openings came out today. I love job openings. The Federal Reserve

12:27loves job openings. A lot of people hate it. They just think it's like a made-up. Jolts,

12:30right? This is the famous jolts. Yeah, the jolts, the jolts. It's been a big part of my work in

12:35the last

12:35decade. It's been a big part of my work with the COVID-19 recovery model, also the labor, getting all

12:41the

12:41jobs back by September of 2022. So, job openings fell a little bit. The internals are pretty much

12:47kind of the same. Hires picked up a little bit. Layoffs unchanged. Quit ratios. So, internally,

12:54it looks like the marketplace of last year to a degree. But I always stress, I look at the labor

13:01data different than everyone because I just don't think the economy functions well the first year of

13:07trade war. So, job openings got really low in December of 2025, which concerned the Fed, but

13:12then it rebounded. And now it's coming down just a little bit. If I think of the flow of reporting

13:19on

13:19the first year of a trade war, second year of a trade war, the labor data got better, not just

13:24because nominal numbers grew, but the breadth of jobs got better. Remember, the Federal Reserve did not

13:30like the fact that there was only two sectors of the economy growing the jobs data last year.

13:36There's not a lot of layoffs in the job opening stadium. Just remember, one and a half to two

13:41million people lose their jobs every month. It's normal, right? But when growth slows down,

13:47consumption slows down, profit margins get hit, then you start to get more firings and no hires because

13:53you don't need that labor. This was the missing piece for the recession people. A lot of people thought

13:58low job growth meant the economy was breaking. No, we had a lot of drama. There was not a lot

14:03of

14:03breath. Hiring wasn't good, but growth and investment was still good enough to keep the

14:09expansion going. And this is something to think about going out in the future because if the labor

14:14data gets a little bit softer, how does the Federal Reserve react? My thinking is that as long as they

14:20see jobs being created above 33,000, they'll be okay as long as there's breadth and jobless claims stay

14:27low and the unemployment rate stays low. So you could have like 10 reports of 40,000 jobs being

14:33created. And that seems ridiculously low, but in their minds, because of population growth,

14:40they'll say that's good enough as long as the unemployment rate doesn't rise. The unemployment

14:44rate starts to rise and you don't have the labor force argument, then that's a different story.

14:51But jobless claims still near low. So keep an eye on it. Again, two to three job reports a year

14:56come

14:57as a big width, right? It doesn't mean you're going into recession and two to three job reports come out

15:02as a big, you know, beat. Doesn't mean the economy is like super on super cycles. This is just a

15:09flow of

15:09data. So job openings have fallen a little bit from the peak, but still at levels that I think the

15:15Fed

15:15thinks are okay. So I'm still not used to like, as long as we get above, like, or as long

15:20as we get

15:21like 30,000 jobs, that's fine. Or 40,000 jobs is fine. I'm like, how is that? How is that

15:25fine? So

15:26when you think about, I know that's how they feel that's, that's their calculation. What is your

15:30calculation to be like, what would actually be the right number there? I have never changed my

15:36break evens. They're at 78,000. Now I have, I've always had lower job estimates than other people

15:43because population growth is slowing down. A 2024 is a really good example. 2024, people thought we

15:50were going to recession because job growth was falling. I was like, job growth is falling literally

15:55to my estimates because I always calculate for population growth, right? This is one of the

15:59reasons why in the last decade, my job growth was lower. Most Americans are always working,

16:05right? Just most functioning Americans that need a job are always working 24 seven, right? But if

16:11population growth slows and the baby boomers are leaving, right, they need to be replaced.

16:16It's a wash, right? They leave the workforce, somebody comes in, it's a wash. If you have a

16:20growing economy still, you need more labor, you get job openings. This was the thing in the last

16:26decade when I said job openings are going to get to 6.21 million. People thought you're crazy. There's

16:3096 million people out of work. Don't read Zero Hedge. It's zero brain dead. Don't listen to the

16:37Russians, Chinese, Iranians, or the anti-Central Bank people. These people are all crazy. There was

16:41never 96 million people out of work looking for jobs. Any case.

16:49You digress.

16:51I digress. But because population growth is slowing down, you can have very, very low job growth to

16:57historical trends because you just simply don't have enough people. Now, we also have to remember

17:02we're kicking a lot of people out and we're letting a lot less people in. Now, if you average out

17:08the

17:08immigration data for the last seven years, you smooth it out, it looks a little bit differently.

17:12But this is just a reality of an aging population. Older, older Americans, there's a certain point

17:19that they still don't work anymore, right? And if your economy is still growing, and we have good

17:23replacement workers. I say one of the advantages the U.S. has over other countries, over China, Japan,

17:28and Europe. Millennials are massive. Gen Z is massive. Gen A behind them is going to be massive.

17:34We have good replacement workers. That's how I label them. We're not like growing massively anymore,

17:40but we have enough to replace them and keep consumption going in the workforce. But it also

17:45means that you really, really need like a titanic event to get the unemployment rate to go much higher,

17:51right? The Great Recession, 2008, COVID, right? But outside of that, the unemployment rate can stay low for

17:57a long period of time because every day that goes on, every month, people leave the workforce

18:02and they need to be replaced. Because no country has a Dorian Gray labor market.

18:07It's true. And you have not seen the AI, you know, the jobs lost to AI above a norm that

18:15makes you worried.

18:18No. Now, just remember, I shouldn't say everyone. There was this really big hype that AI was going to

18:26take all the jobs and who was ever going to buy the house. Why do we always go to like

18:31the worst days

18:31of Skynet? Because I think the AI companies themselves were telling people like, we're going

18:37to take all your jobs, but it'll be okay. You'll be all right. They said the same thing with robots

18:42in the last decade. So this is funny because I literally have newspaper clips from 1870 all the

18:49way to 2026 where supposedly this new technology was always supposed to take the jobs, right? You know,

18:55horses, horse carriages, all, whatever it is, all these things. And it never has. Now, I always say

19:02death. Death is actually a big economic variable. People are going to age and die. So it's really hard

19:10unless you have a massive, let's just say the US population growth was booming, right? Let's say

19:15immigration is off the charts and you have a lot more people who are consuming goods and services,

19:21but there's a lot more people looking for work. Then the unemployment rate can rise. But with our

19:26population growth and our demographic, it's really hard to get AI to like take all the jobs. Maybe 20

19:33or 30 years down the line, there's some manual labor that robots will take, you know, as you see the

19:38advancement in technology. I saw a robot presentation. It was really impressive, actually. Down the line,

19:43there are certain jobs that maybe humans don't need to do anymore. But we are dying as a population

19:51in terms of we're losing a lot of people out of retirement, and then they're going to die.

19:56They're just going to wash. Now, it's a whole different story. We're growing in a massive way,

20:00but we're not. The population boom in the last century cannot be replicated, right? There was some

20:07report that says we need like two to three billion people to die to save the planet. It's like they

20:14wanted to do the Thanos thing, right? And we cannot replace the population growth that we saw in the

20:20last century. If you look at that chart, that's the mother of vertical charts ever is the population

20:26growth in the world. So naturally, wealthier countries are just slowing down. They're dying off.

20:33Japan, good example. 40% of their population will be dead by the end of the century. They sell more

20:39adult diapers than baby diapers. So you can keep the unemployment rate lower than what you would

20:44traditionally might see in other cycles, just because people are leaving the workforce. So the

20:50job openings data wasn't great, but it wasn't bad. It's good enough for the Fed. Keep an eye on

20:56the ADP report that'll come out today and also Jobs Friday. Just remember with jobs, wage growth,

21:03right? Wage growth, if the employment cost index was at 3.1%, the Federal Reserve likes to see that.

21:10But if wage growth gets below 3%, that really hits the Fed's model. All hawkish people on the Federal

21:19Reserve would keep their eye on it. Because when you have wage growth below there, it's easier to

21:24get to 2% inflation than it is at 3.5% or 4.5%. And they hated wage growth

21:30at 6%. People are making

21:31way too much money. Their wages were running too hot for them.

21:34They might buy houses if you give them too much money.

21:37I said, you know what? I did that on CNBC once where I literally went on TV and then they

21:41said,

21:42well, you know, why doesn't the Fed want housing to come out? It's like, whoa, what are you talking

21:46about? Listen, if people buy homes, they're going to have sex. They're going to have kids. They're

21:50going to buy more stuff. Life is inflationary, right? Especially if you're buying a home. All

21:56the stuff you have to buy for a house, all the things that go into a house, right? If you're

22:00the

22:00housing market, this is the one thing that the Federal Reserve can control. And remember Neil

22:05Kashkari in 2023, rates got down to 6%, just 6%. And this is like off the fastest and biggest crash.

22:12She's like, oh, housing showing life. We don't, we can't have that. He's right. They're so petrified

22:20that if people start, more people start buying homes, then they might buy more stuff. And that's

22:25inflationary. Beth Hammock would have a panic attack. She'd be like, no, no, no, no, no. Just

22:30don't go to Ikea. No, no, you can't paint your house. No. So that's one of the things about

22:37housing and the Fed. And it's, it sounds weird. But when Neil Kashkari literally went on TV and

22:42said, 6% rates. No, we can't have housing. We can't balance an economy if home sales are growing.

22:48So it is what it is. This is the world we live in. So we just learned to deal with

22:53it.

22:54Okay. Well, we are almost out of time. I will say we have heard from some of our listeners

22:59about your analogy that you like to say that, uh, that phrase mother economics is a serial killer.

23:05She'll always leave you, uh, evidence or crumbs or whatever. I don't like that phrase yesterday.

23:10We're like, tell us what you think we have heard from some people so far. It seems like they agree

23:15with you. So if you agree with me, you guys need to reach out because listen, I don't want to

23:19lose

23:19again to Logan. It's just, so I want to give, I want to give props, uh, Angie, who is the

23:24head of,

23:25uh, KW in Seattle. We're going to be in Seattle, uh, in October, uh, uh, which is interesting

23:31because we're going to be in Florida. Uh, when this podcast comes out, we're going to be in

23:34Florida. Florida market is much different than the Seattle market, but Angie actually remembered

23:38where that came from. That came from the, uh, uh, world war Z. Yeah, no, I love that movie. I

23:44love

23:44that phrase from that movie. And it's been a long time since I've seen that, but the scientist was

23:49right. When the scientist said mother nature, she's a serial killer. She's

23:55really good at it, but like all serial killers, you know, you need to, you need to solve the

24:00crime. They need to, and this is why it does not work with, with mother economics. It works

24:06with mother nature. It does not work with mother. And you said, and I said COVID, right? What was

24:12COVID COVID was mother nature. If you wanted to look at it, whatever it was, millions of people

24:16were dying. The economy had to be shut down, but the COVID-19 recovery model, because mother

24:22economics, I created a recovery model and I needed clues. And the clues were telling me,

24:29okay, she is coming back. America's, by the way, y'all need to go read the America's back

24:34recovery model. That was absolutely just so much fun. We literally really timed the entire

24:41U S economy recovery based on a few early points. Crumbs. So mother economics, she gave

24:47me crumbs. The St. Louis financial stress index was heading lower. The 10 year yield was above

24:5262, 0.62%. Those were the crumbs that mother economics was telling me. And that was like April

24:587th, 2020 games on. So why is it different? Wheeler?

25:03It just is. It just is. I mean, yes.

25:06How many jobs were being lost? How much lives were being ruined by mother economics recessions over the

25:12decades and decades, a great depression, the great financial recession, COVID, all these things.

25:18And we have to find clues because we want to be the detective.

25:22You can be the detective and not the troll and still not have a mother economics.

25:26I just want to say, Angie, even though she was, she's very pro woman, she said, it's a conflict.

25:32This is, this is a great metaphor. And this is, you know,

25:36She wants to support me, which I appreciate it. All right. You guys weigh in, weigh in,

25:40let me know. Listen, when I'm wrong, I, you know, when I'm wrong.

25:45No, you still think there's a mortgage rate locked out. Come on. You, come on. You lost that one.

25:51You're going to lose this one. When are you going to, when are you going to learn?

25:54Podcast partner, podcast partner. When are you going to learn?

25:58Y'all see just for that, just send support for me just for that. All right. We got to go,

26:03Logan. Thank you so much. We'll talk again soon.

26:10We'll talk again soon.

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