04/02/2026
This week’s mortgage rate update:
We’ve Gotta Hold On To What We’ve Got
Mortgage rates improved this week — a welcome reprieve after a month of steady climbing. Time will tell whether this is just a pause or the start of a trend reversal, but we’ll take it.
Oil prices are rising again today, but the bond market isn’t reacting the way it has in recent weeks. That may signal a shift in focus, the market may now be looking past the immediate oil shock and turning its attention to the longer-term economic fallout — slowing growth, softening demand, and what that means for inflation down the road.
Bonds traditionally serve as a flight-to-safety trade in uncertain times. Early in this conflict, that dynamic didn’t materialize because inflation concerns from rising oil prices overshadowed everything. Now, we may be starting to see some of that safe-haven demand, which is a good for the immediate rate outlook.
Rate Hike Fears Reversed
One of the biggest re-pricings of Fed expectations in recent memory, market odds of a rate hike in 2026 dropped from over 50% on Friday to near zero following Fed Chair Powell’s appearance at Harvard on Monday.
Powell signaled there’s no urgency to raise rates, noting that inflation expectations “appear to be well anchored beyond the short term.” His reasoning: monetary policy works with a lag, and by the time a rate hike would actually impact the economy, the oil price shock will likely have passed “by the time the effects of a tightening in monetary policy takes effect, the oil price shock is probably long gone.”
What’s Ahead
Tomorrow, markets open but close early for Good Friday. We will still get the March BLS employment report in the morning. Barring a major surprise relative to market expectations, it’s unlikely to move the needle much. We may also see some additional rate improvement heading into the long holiday weekend as investors seek the safety of bonds.
