Market Recap: Rates Dip Again Amid Global Headlines
This past week, interest rates dipped once again, driven by a wave of mixed economic news. Let’s break down what happened—and take a look at what’s coming in the week ahead.
“Don’t stop believin’ / Hold on to that feelin’” — Journey, “Don’t Stop Believin’”
Israel-Iran Ceasefire Shakes the Market
In a week packed with headlines, the reported ceasefire between Israel and Iran took center stage. While long-term stability remains uncertain, markets responded with optimism. Oil prices, which briefly spiked above $80 per barrel in under 24 hours, dropped like a rock—falling into the mid-$60s.
This kind of sharp move is rare. And the bond market liked what it saw. Lower oil prices tend to ease inflation pressures, which gave both bonds and stocks a solid boost.
Pressure Mounts on Fed Chair Powell
The Federal Reserve is facing renewed heat from both the market and the political arena.
After the June 18 Fed meeting, internal dissent is growing. President Trump and members of his cabinet continue to press for rate cuts, citing tame inflation and declining energy costs. Now, some Fed officials are starting to echo that view.
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Michelle Bowman (Fed Vice Chair of Supervision) said she’s less concerned about tariffs driving inflation and is open to a rate cut in July.
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Christopher Waller (Fed Governor) noted tariffs are unlikely to spark inflation—supporting the case for a cut next month.
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Austan Goolsbee (Chicago Fed President) summed it up plainly: “Somewhat surprisingly, the impact of tariffs has not been what people feared.”
Translation: a July rate cut is suddenly on the table.
Final Q1 GDP and What’s Next
The final reading of Q1 GDP came in at -0.5%, largely driven by a trade deficit tied to front-loaded inventory ahead of anticipated tariffs. It’s widely considered an outlier.
Recession fears? Not yet.
To hit official recession territory, we’d need two straight quarters of negative growth. But Q2 is expected to come in at +3.00%, and most economists don’t see a recession hitting in either 2025 or 2026.
Mortgage Rates and the 10-Year Treasury
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30-Year Fixed Mortgage Rate (as of June 26, 2025): 6.77%
That’s down slightly from 6.81% the week before. -
10-Year Treasury Yield: 4.25%
That’s the lowest it’s been since early April. The number to watch here is 4.20%. That level has acted as a floor for nearly nine months. If yields fall below it and hold, it could drive mortgage rates even lower.
Bottom Line
There’s still uncertainty around tariffs, energy prices, and the potential impact of the long-discussed “Big, Beautiful Bill.” But despite the noise, the bond market has rallied for over a month—and that’s pulled rates lower with it.
If we break through that 4.20% technical level, we could see mortgage rates improve even further in the weeks ahead.
Looking Ahead
The week ahead is shortened due to the July 4th holiday, but it’s still Jobs Week, and that means labor data is front and center.
If the numbers disappoint, it could ramp up pressure on the Fed to act—and boost the case for a July rate cut.
Stay tuned.