Episode summary
Bond market rejects Treasury’s game plan, for now
HousingWire Daily
· · 20 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argues that the bond market has rejected Treasury’s latest buyback plan, with the 10-year yield rising after the announcement of a $6 billion repurchase. He says the move was too small to calm markets, especially with escalating conflict pushing oil higher and adding fresh inflation pressure. In his view, mortgage rates are still being held below 7% mainly by spreads, not by a benign rate backdrop.
The bigger concern for him is that the Fed is now facing a mix of sticky commodity inflation and geopolitical risk that makes the upcoming inflation reports less decisive. He says the rate-cut story is already dead, and even softer CPI or PPI data may not change the Fed’s posture if energy and industrial inputs keep rising. Logan points to diesel, copper and Brent crude as the prices the Fed will watch most closely.
He also says the conflict could keep escalating for months, which would make it harder for policymakers to lean dovish. On his telling, lower mortgage rates would require a much bigger Treasury response and, more importantly, an end to the conflict-driven inflation shock. Until then, he sees mortgage spreads as only a temporary shield against higher borrowing costs.
Key takeaways
- Logan Mohtashami says the Treasury’s $6 billion buyback announcement was too small, and the 10-year yield rose anyway.
- He argues mortgage rates are staying under 7% mostly because of mortgage spreads, not because the market is calm.
- Logan says commodity inflation in oil, diesel and copper matters more to the Fed now than near-term soft inflation prints.
- He says the rate-cut story is already dead, and the Fed is unlikely to turn dovish while conflict risk keeps rising.
- Logan thinks Treasury would need a much bigger intervention to meaningfully push yields lower.
Notable quotes
“The bond market and the conflict are moving more and more in tandem. In fact, it's been the highest correlation in in many years”
“If I am the Fed hawks and I heard President Trump say that we're just going to wait until after the elections”
“this is not QE. This is not really designed to push rates lower”
“I mean, this is not how I wanted to prove this premise”
How the episode opens
Welcome everyone. I'm joined today by lead analyst Logan Mohtashami to talk about how the Fed is weighing inflation ahead of its meeting next week. Before we dive in, here are the top five trending stories on housingwire.com.
The first is GSEs open Vantage Score 4.0 to all single-family lenders. Followed by Logan's article, commodity inflation is hot, but the Fed is still focused on core inflation. Then we have UWM drops high balance LLPA's, extends Bullseye 90 pricing.
And who's running Real ReMax? The new leadership team takes shape. Finally, we have Envoy Mortgage taps Finally, we have Envoy Mortgage taps Chad Smith as CEO, deepens integration with Place.
Okay, we have a lot to get to. Let's dive in. Welcome back to the podcast.
It is wonderful to be here. What a crazy, crazy, crazy, crazy day. It's Wednesday morning.
Um a lot has happened, you know, by the time this podcast comes out the PPI inflation will come out the CPI inflation, but we have a lot of we have a lot of news that is very, very important to the real estate mortgage industry that doesn't have anything to do with the inflation reports just yet. Um You know, Scott Bessent is doing this, you know, I'm he he he talks about how he's the house, that he's now the biggest trader in the world, and that, you know, the he's trying to, you know, talk tough to the bond market, and everyone kind of joked about it on Twitterland, but here comes Wednesday morning, the conflict is getting worse, right? We're blowing up tankers, they're blow they're shooting missiles at bases.
The 10-year yield didn't really move too much, but oil prices are picking up. And like we've talked about, that oil chart looks terrible now.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- treasury debt announcement
- bond market reaction
- fed inflation outlook
- core vs commodity inflation
- upcoming fed meeting
Companies and tickers mentioned
- U.S. Treasury
Watch the episode
Watch “Bond market rejects Treasury’s game plan, for now” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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