The market reaction to events around the Iran conflict, specifically oil prices and bond yields, has made it one of the most interesting weeks of the year. President Trump is frustrated that a peace deal hasn’t happened and could be worried that Iran is trying to string this out as long as possible to create a lot of political pain for him and other Republicans, as midterms are coming up soon. I wrote about that in this article and discussed it on this episode of the HousingWire Daily podcast.

However, the market reaction to this week’s news is very telling to me. Mortgage rates and oil prices haven’t skyrocketed higher — in fact, oil prices and the 10-year yield have tended to fade lower after each headline. Let’s look at what is going on and what it could mean for rates the rest of the year.

Oil prices

We are well into June and oil inventories are being drained fast, which is a big problem for the world economies. This week, the U.S. attacked Iran twice and President Trump has threatened to attack them later tonight and seize their oil fields. With every headline, oil prices haven’t regained the previous high. Why?

I believe the oil market thinks we are closer to a deal than the general public does. Traders don’t want to commit more money at higher prices because they don’t want to be caught off guard. We saw how quickly fertilizer prices peaked at $986 on April 10, 2026, and have since collapsed to $799. Pre-conflict prices were $753 and commodity traders are all well aware of how wild trading can get. This week, we have had crazy headlines and we haven’t been able to get WTI oil prices above $94.

We might be at the point where traders believe Iran itself can’t hold out much longer, especially if NATO gets involved in July, as they promised, with oil revenues falling due to the blockade.

Mortgage rates and the 10-year yield

Mortgage rates are near yearly highs, and the 10-year yield has behaved similarly to oil prices this week: it rises on headlines and then tends to fade. Currently, the 10-year yield is 4.52%, below the peak of 4.68% we have seen this year. This, even with all the crazy headlines this week and PPI inflation was very hot today.

For now, the 10-year yield has only exceeded my peak forecast of 4.60% once, during the most hectic headline-driven events of the conflict, and is currently 16 basis points lower the top of 4.68%.

On another note, we should give a medal to mortgage spreads, which are the only reason mortgage rates haven’t ranged between 7%-7.875% this year.

Mortgage rates do have some upside potential above my target peak forecast of 6.75% for the rest of the year, but for now, better mortgage spreads and how bond and oil traders are acting this week have kept a lid on rates getting above that.

Conclusion

If you’re confused on why oil prices and the 10-year yield aren’t higher, I totally get it. Remember, traders don’t care about politics or what the next pundit says on TV — they’re here to make money.

This week, we had many reasons for oil prices and the 10-year yield to go much higher, but currently they’re fading lower despite these headlines, taking oil prices and the 10-year yield slightly lower. I’ll continue to watch the headlines and how these markets behave to see how these factor affect mortgage rates.

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