Iran Deal Expiration Sends Shockwaves Through Bond Market

The expiration of the Iran Deal has sent shockwaves through the bond market, causing a surge in 10-year US Treasury yields. This increase will likely have a ripple effect on mortgage rates, which are already elevated at between 6.63% to 6.69% for purchase transactions.

According to Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed rate has been steadily rising over the past few weeks, with a recent drop of six basis points to 6.63% APR. This increase in rates is likely due to the expiration of the Iran Deal, which has resulted in higher oil prices and inflation expectations.

The next 10 days will be crucial for mortgage buyers, as several key data releases and central bank speeches are scheduled to take place. The Federal Reserve's minutes from its July meeting will provide insight into the committee's deliberations, while Fed Chair Kevin Warsh's speech at Jackson Hole is expected to signal major policy pivots.

Meanwhile, investors are bracing for a potential rate hike in September, with the CME FedWatch futures putting the probability of a hold at 71.6%. The Consumer Price Index data on September 11 will be a key indicator of whether rates move higher or lower through year-end.