Episode summary
Will higher oil prices and rates slow down the economy?
HousingWire Daily
· · 23 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argued that higher oil prices and higher rates are already doing much of the Fed’s work, but not in a way that clearly points to recession. He said 10-year yields around 4.66%, two-year yields at yearly highs, and mortgage pricing near 6.77% show the bond market has repriced a lot of risk already, while mortgage spreads have helped keep rates from breaking meaningfully above 7%.
He said the Fed has “won” this battle because real yields are the highest since 2023 and the market has already tightened financial conditions before the next Fed meeting. In his view, that makes a July rate hike unlikely, but a hawkish message is still possible, especially if the conflict and oil market remain volatile.
On the economy, Logan said he is watching whether the recent softness is a normal labor-market rebound fading out, or a deeper slowdown. He pointed to slower ADP weekly data, flat-ish purchase applications, and the risk that higher oil and tariffs could cool consumption and investment, but he stopped short of calling for recession without stronger evidence.
Key takeaways
- Logan Mohtashami said the Fed has already gotten most of the tightening it wanted from the bond market, with 10-year, two-year, and three-month yields all moving higher.
- Logan Mohtashami said mortgage rates around 6.77% are being cushioned by mortgage spreads, making a move well above 7% harder unless the conflict worsens.
- Logan Mohtashami said July is more likely to bring hawkish Fed guidance than a rate hike, even with oil and geopolitical risk elevated.
- Logan Mohtashami said the labor market looks closer to a break-even slowdown than a recession, though he is watching ADP and other jobs data for confirmation.
- Logan Mohtashami said purchase applications are basically flat after seasonal noise, so the recent weekly swings should not be overread.
Notable quotes
“The Fed won. They got everything they wanted”
“this is why it's hard to get rates really above 7% unless this conflict really starts to uh take off again”
“Real yields are at the highest levels we've had since 2023”
“I think the two happiest people in America right now are Beth Hammock and Lorie Logan”
“what I see is that the ADP weekly data is slowing down already”
How the episode opens
Welcome everyone. My guest today is lead analyst Logan Moto Shami to talk about whether higher oil prices and rates will slow down the economy. Before we dive into that topic, here are the top five trending articles on housingwire.com.
First is the contributor piece by Sam Valver Vverde, formerly of Jenny May and now at Urban Institute with the headline, "We are not ready for the next housing downturn. Next is, "Will Trump's new Canadian tariffs add cost risk for builders? followed by, "Mortgage rates hold near 6.85% ahead of Fed meeting.
Then we have CFPB eyes reverse disclosure overhaul, attorneys warn of costs. Finally, we have Logan's how high can mortgage rates go with Iran Conflict 2.0. I know.
Okay, let's dive into today's topic. Logan, welcome back to the podcast.
It is wonderful to be here. This is a very, very fun day for me because there's a lot to talk about. Uh uh and first thing, um tenure yields at 4.66 right now.
Mortgage pricing is just a tad higher today. I think the last quote I saw was like 6.77. Um, and again, this is why we all hug a mortgage spread.
Uh, this is why it's hard to get rates really above 7% unless this conflict really starts to uh take off again. Uh, mortgage spreads are doing their thing. I I was thinking about, you know, my nobody's ever seen like a normal mortgage spread, you know, downturn in in it because it's been like over 20 years.
like we had the great financial recession, we had COVID, but how does mortgage beds react in a normal kind of setting and uh I think a lot of people are now starting to get why it's so important and why it's uh kept things kind of at bay compared to what it was the last few years uh when rates are well already been well above seven in 2023 we'd be near 8% today.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- oil prices
- mortgage rates
- fed policy
- economic slowdown
- housing downturn risk
Watch the episode
Watch “Will higher oil prices and rates slow down the economy?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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