Logan Mohtashami on bombings, Fed rate cuts, oil pricing and more

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about mortgage rates after events of the last few days, including the U.S. bombing of Iran nuclear sites, potential July rate cuts by the Fed, oil prices, inventory numbers and more.   Related to this episode:  ⁠How will mortgage rates react to US bombing of Iran? | HousingWire⁠  https://www.housingwire.com/articles/how-will-mortgage-rates-react-to-us-bombing-of-iran/  ⁠Fed Vice Chair Michelle Bowman supports July interest rate cut |  HousingWire⁠  https://www.housingwire.com/articles/fed-vice-chair-michelle-bowman-supports-july-interest-rate-cut/  ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.

Transcript

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about mortgage rates

00:11after some of the crazy events of the last few days, including the US bombing Iran nuclear

00:17sites, potential July rate cuts by the Fed, oil prices, inventory numbers, and more. So

00:23hold on. Logan, welcome back to the podcast. You know what I was doing Saturday night? I

00:31know what you're doing Saturday night. I said, Chloe, get me bond dollar oil charts now. I

00:39got my 24 sunglasses on and I was like, Jack Bauer, back to work. Wow, wow, wow. It is

00:47Monday morning. And a lot has happened. For those of you that read that article, I always

00:55believe in chaos. I love I love everything in chaos because, you know, in chaos, you want

01:01to run to the fire and, you know, you want to go into it. And of course, on Saturday, a

01:08lot of people said two things. Number one, inflation is about to take off. War is about to take

01:14off. Mortgage rates are going up Monday morning. The Fed can't cut rates. They might hike rates.

01:19And then you have the other camp that said, well, listen, traditionally money goes into

01:24bonds. Stocks fall down big. Oil shoots up higher. You go into the safety trade. So what

01:30the article that I wrote on over the weekend did it early Sunday morning without any kind

01:36of market heads up was tell everybody, hey, listen, things are going to be calm because things

01:42were calm in the previous week because we had so much economic data. We had a Fed meeting.

01:49We had Trump and Pulte against Powell. We had all this stuff. Not much has been happening.

01:54Not much has been happening really this year outside of Godzilla tariffs. And if it wasn't

01:59for Godzilla tariffs, the bond market would have had that extreme move down and up. And even

02:05on Jobs Friday on April 4th, you know, when everybody was so sure we're going into recession

02:10and bond yields, I was like, we really should be at 435 today if it wasn't for Godzilla tariffs.

02:16So here we are, Saturday, bombs going off, nuclear facilities high, Jack Bauer coming back to play

02:2324 roll. And we're just going to say, listen, things should be calm unless things escalate. So

02:31Sunday night trading, oil prices up a little bit, nothing drastic. Bond yields up just a little bit

02:38dollar. Nothing much was happening. If you did not know three nuclear facilities were

02:43shot and destroyed with B-2 bombers, you'd be like, okay, it's a pretty mild Sunday.

02:49Well, here comes Monday morning.

02:52Wait, wait, we have to, no, we have to talk about that because here we did our podcast on Friday and

02:58we're like, who knows what could happen? And we were talking about the Fed stuff and we were doing all

03:02that. I don't think that was on our bingo card. It wasn't on my bingo card that like, listen,

03:07Saturday night, we're going to have, we're going to be bombing Iran. And then, so you come on and

03:12you're like, how does this affect mortgage rates? Which I really appreciate. You got a really early

03:16read on it. Okay. And then comes Monday.

03:20Monday morning. Now, again, if you did not know three nuclear facilities were bombed,

03:27you'd go, oh, it's a mild Monday morning. Bond yields were down just a little bit.

03:31Oil prices weren't really moving that much higher. And the dollar had nothing, nothing drastic.

03:39You know, the 10-year yield moved down a few basis points. We got to the 435 level. And then,

03:45then something happened. Fed Vice Chair Michelle Bowman, who joined Team Logan on March 7th,

03:552025, labor overinflation. She was a hawk for a long time. And she thought we have to focus more

04:01on the labor market than inflation. She comes out and wires hit. Oh, I'm up for a July rate cut.

04:10I'm down with the homies down there. Let's talk about this. And I'm like, what? And then the 10-year

04:16yield, two of the things we thought, what could take the 10-year yield lower from 435 would be

04:22weaker economic data, weaker labor data, things missing estimates, traditionally what we've seen

04:27in the previous few years, or a Fed very dovish statement. So the civil war that is brewing within

04:35the Fed, Waller and Bowman and Sarah, who did we talk about in the last podcast? We're saying

04:42Bowman and Waller should be Trump's choices, you know? And here he is. And that took the 10-year

04:50yield lower. So here it is Monday morning. And now that even with the ISM data being better than

04:55estimates, existing home sales better than estimates, there we are. And now we can start

05:02to think maybe 12 months out, forget about Kevin Walsh or the Shadow Fed. What if we just go with

05:09either Waller or Bowman, like we talked about in the last podcast, give the Fed a little bit more

05:15credibility? And then we'll take it from there. So that was fascinating. And then the first response

05:23from Iran, which we, by the way, I have so much fun. For those of you who have joined the Instagram

05:28family, it is the most views we've ever got on stories. And we're doing oil charts. And we're

05:32saying that if there is a response from Iran, usually they give a heads up and say, hey, listen,

05:38we're about to bomb, so get everyone out. That's what occurred. And as soon as that was known,

05:43oil down 8%, stock market rallying to 10-year yields at 432. This is a day for America, baby.

05:52This is a day for Americans. Wow, that was fun. That was good stuff, Wheeler. This is why we do it

06:00for these kind of moments. It's interesting that, like you said, so we bombed three nuclear facilities

06:06on Saturday night. And then today, Iran retaliated by bombing a US base in Qatar. So it's like,

06:13these things don't seem like they're America first, like we would be in a good, better spot

06:18afterwards. So I think that's very confusing. It is. I honestly, like, you know, the takes people

06:28were sending me, especially with, you know, oh my God, rates are going to shoot up on Monday rates. And I

06:33was just like, we always try to highlight mortgage spreads being a very important variable. And that's

06:39why in that article, we kind of wanted to showcase things have calmed down a lot in 2025, compared to

06:44the past few years, and even going back all the way to 2012. But in this context, when yields go up

06:50now, without any stock market drama, the spreads get better, it limits the damage to the upside. And

06:57this is why even the last few weeks, not too much has been happening. It's a very, very narrow mortgage

07:03rate. So you would need some kind of event, something out of the norm, because this wasn't

07:08going to be it. And we're sitting here and just, it's not much is happening on that, considering the

07:13scope of the data that Fed Vice Chair Michelle Bowman was actually the big mover. And before we did this,

07:22I think oil was at $68. I think the high, the recent high on Friday the 13th, maybe the first time

07:29Israel attacked was at $78. The 10-year yield at $4.33. The dollar's up a smidge from the recent low.

07:36So the dollar's finding a low base to work off of. But wow, the two big cases that people were

07:43worried about on Monday just weren't happening. And we did these live stories all the way up to like

07:5010, 11, 11 o'clock at night and going, hey, really, this is not much is going on, guys.

07:54So you could sleep well, you know, tomorrow. And here we are, Monday morning. God, this is where

08:01it gets fun, Wheeler. This is the good stuff. Oh, fun for you. Yeah. So let's talk a little bit

08:07about that non-response. Because in your article, which was about, you know, after the US bombing,

08:13what will happen to mortgage rates? In that article, you talk about the reason that you thought

08:19that we wouldn't see a big response is because it's almost like there's like headline fatigue.

08:24You know, you don't say it that way in the article, but you talk about the fact that

08:27there have been so many things this year. In a normal year, bombing a nuclear, three nuclear

08:33facilities of Iran would have made some impact. Let me, let me, let me put it to you this way.

08:40I believe traders have gotten smarter. Okay. Because what happened is oil prices have moved

08:47up a lot before this event and through this event. And how we highlighted it in the videos that

08:54oil prices at 75, 76 dollars, if you look at the downtrend from the Russian invasion of Ukraine,

09:02that's hitting a key technical level. So as a trader, you're thinking, God, if I have one positive

09:08headline, this sucker is going down. So remember, traders are here to make money because they are

09:15also not the march of dimes, right? And they like making money. So they don't really want to be on

09:21the wrong side. So they tend to get a little bit fidgety when you're like dealing with these events.

09:25So when the news came that Iran shot missiles and it's like, okay, here we go with the setup again,

09:31everybody heads up, we're trying to save face. That was to traders, a very deescalating event.

09:37Right. And then, ah, bond yields fell. So I think traders are getting a little bit more smarter with

09:42how to deal with geopolitical events. And geopolitical events are very short term.

09:46But we didn't see the extreme reaction on either on the up or down. This doesn't mean that right

09:52after this podcast, some crazy thing can happen. But mortgage rates just doing, if you didn't know

09:58there was all these events, it would be like a normal day. Oh, Bowman came out and said, maybe

10:01do rate cuts in July, that would be the big story out there. So it was a pretty wild weekend. And this

10:09is why we're doing four times a week. And we're going to do a podcast on Monday to account for what's

10:14happening over the weekend and Monday morning. Can you imagine if we had to wait a whole nother day

10:20to talk about these things? We couldn't do it. You couldn't do it. That's why it should be seven days a

10:25week, twice a day, Logan 24 seven. That's just how we roll. Yes, if we could only do that. Okay, so

10:31let's talk about those mortgage rates for just a minute. I know there's some other things we want

10:35to get to. But the fact that Bowman said she's open for, you know, July, she supports a July rate

10:40cut. What could that look like? And is the little reaction we've already seen? Do you think it's going

10:46to get priced in before we even get there? So before the year started, two rate cuts were already

10:53priced in. Okay, so now the battle becomes Jerome Powell versus America. And now America has two

11:01Fed presidents or vice president and a Fed president wallet to basically say, homie, we're we don't think

11:07we need to wait, we just need to get to neutral policy and work from there. That's all it is.

11:11Because two rate cuts were kind of already priced in in the year. It's just they're moving it out.

11:17Right. So there's some uncertainty that, you know, maybe do we get any, in any case, both her and

11:25Waller were talking about basically, let's keep an eye on the labor market more. And in that context,

11:30it just means that if Waller or Bowman are going to be the next Fed chairman, and the labor data gets

11:39softer, right, because they are not a neutral policy yet. We're not even talking about a commented

11:45policy. We're just talking about neutral. Then if the labor market gets weaker and weaker, they're already

11:50getting ahead of the curve. Right. And we have a lot of Fed presidents talking this week. And we have

11:56Powell talking to Congress. Oh, that's going to be popcorn fun. I don't watch TV in that sense. But I could

12:01only imagine what's going to happen. But in this case, you could actually start putting Bowman and

12:08Waller together. And if they start talking more dovish, that is the forward guidance. That's not the

12:13shadow Fed that Warsh would have been. But this is, hey, listen, we're going to really wait the labor

12:18market. And they kind of already did that. Waller has been kind of already been doing that for some

12:23time. Bowman joined the team early. So it's just, it just gets, it gets a very fascinating that this

12:28happened on a Monday with everything else going on. So, well, it, to me, again, it's labor, labor,

12:36labor, you know, the growth rate of inflation, the last PCE report was 2.1%.

12:42If we're talking about tariffs are going to, you know, raise the Fed target is 3%, right? 3%,

12:503.5% Fed funds rate still gets you to maybe a neutral policy in that regard. So you've got

12:56ways to go down without being accommodative or neutral. So I think that's where, that's the

13:02more sophisticated crazy takes on the Fed and what policy is. But this is a, this is basically a

13:08strike back against Powell's kind of, we're just going to wait and see. Hey, by the way,

13:12the labor market is really bad. If you're looking for a job, tough luck, just tough luck.

13:18If we're not losing job and jobless claims are not higher, Logan Motoshami was right about us.

13:24We are not going to do anything until, well, not anymore. There are other Fed presidents

13:28and Powell's term is going to go up. So it just makes this dynamic a little bit more interesting

13:33that she came out and this came out on a Monday out there. So time will tell on that, but

13:39we have a lot, we have a lot of things going on here on this Monday.

13:45We do. So I, you know, I want to talk Turkey. Okay. Like, so if the Fed funds rate, if they do

13:51something in July, are you saying that mortgage rates wouldn't move because it's already priced in

13:56kind of like what happened last time where everybody got their hopes up? Like, oh, the Fed's

14:01going to reduce rates and then prices, you know, pricing went up to, to me, to me, we're basically,

14:07I would tell you this, this, this is, this is the real time take. If there is a July rate cut,

14:14that means jobless claims data has gotten really bad over the next four weeks. Okay. And then jobs

14:20Friday at the end of June got bad. So mortgage rates would go lower before the rate cut happened.

14:26If, if the labor data is still firm, you're not getting a rate cut in July, but this is now not

14:33just the July talk. This is going out for many years because Powell is, is done, right? Powell is

14:39done. There, there are already other Fed presidents getting ready to take over his spot. So we're starting

14:45to move into the next phase of the history of the Federal Reserve that, uh, uh, Michelle Bowman,

14:51Christopher Waller, I hope it's the, I hope it's not Warsh. And then we'll, we'll take it

14:56from there. But if you're, if you're talking about a rate cut in July, the bond market will

15:01already go ahead of the Fed if the labor data gets weaker, right? So the, remember Fed meetings are

15:06too late, right? We got that 50 basis point cut is with the bond market already priced in like

15:11almost like five, six cuts already, you know? So that 50 basis point was nothing, but, you know,

15:18economic data got better and yields move up. That's why we would say 65 to 75% of where the 10 year

15:23yield and 30 year mortgage rate could range its Fed policy. Then you just flow with the

15:27economic data. This is why we do channels on the forecast. We don't target mortgage rates.

15:33We target where the 10 year yield can move within a cycle. And this always goes back to

15:36previous decade. When, when I started incorporating them in the forecast, it was a boring forecast.

15:41Every year I say, Oh, we'll just be between 1.6 and 3%, you know, four and a half to, or three and

15:47a half to 4.75. That's what rates. And for the most part, that's what it was for an entire decade,

15:52really. Okay. So when is the next jobs report? So that, I mean, the one that really counts that

15:59we, that the bond market might take to say. So it'll, it'll be at the end of it'll be in a few

16:05weeks, right? We're, we're almost at the end of June. So we have one more jobs report. And again,

16:10jobless claims data has been slowly perking up nothing dramatic, but just perking up and keep an

16:17eye on that. And then just remember before the year started, two rate cuts were already priced

16:22in. So if we just get those, we're just kind of back to where we're moving down to neutral,

16:27neutral policy. It looked like to me it was three and a half percent, uh, in, in within a two year

16:33period. So what does that mean for mortgage rates? Like what does that just means that you can get

16:38towards 6% easier? Okay. This doesn't mean five or anything like that. When we start going to the

16:44five handles, do you need the labor market breaking? You need mortgage spreads to get better. We'll

16:48cross that bridge when we get there. And this is why everyone should read the tracker every weekend

16:52because we keep everyone updated. Think about how much smarter the people who read the track are than

16:57anybody else. Like we had some really smart people on, uh, uh, on X say, Hey, really, I don't want to

17:03wait for these monthly reports. They're like, they're, they're just, they're so lagging. Who do

17:08we, who do we, who do we go to for real-time data? Like the chart daddy, that's what he does.

17:15He is not old and slow. He looks current and forward out there. And when people get to read

17:21the tracker, they're like, Whoa, there's a lot of stuff here and it's just a good date and stuff. So

17:25we got that. And then, uh, uh, existing home sales came out today.

17:29I, there's just so much. Okay. Let's stay with the tracker just for a second. I think it's

17:34interesting because one of the things and you, this comes out on Saturday. So it is great because

17:40you, everybody can get the information before the week starts. They need to do any planning.

17:45And like you said, what you always do a, uh, what to expect next week or what to expect this week.

17:51And what was the main thing you said? We have, we have dead people talking, listen to what they say,

17:56cause that could move the market. Yeah. You know, w w with, with the tracker, the, the week ahead,

18:02it was like, we have a lot of fed presidents talking this week. So we just, we started off

18:07with, with the bomb putt intended on Monday morning, you know, with Bowman. So we, we have a

18:13lot of, we have, I know goals, goals will be picked today. The Chicago fed there. So there's a lot of

18:17things going on and Powell's going to talk to Congress. So we had a lot of that stuff going with the

18:22tracker, uh, uh, the, the housing data, uh, the new listings data just didn't actually fell.

18:28We're running out of time. You know, I I'm happy that we're able to get above 80,000, uh, for the

18:34first time in, in, you know, the last two years have been the lowest new listings data ever, but I

18:38really was hoping for some weeks where we were just above 80,000 and we're trending between 80 to

18:44a hundred thousand, you know, 80 to 110,000 was the norm from 2013 to 19. So we didn't quite get

18:50there and we're running out of time, but again, it just shows there's not this stress seller out

18:57there where during the housing bubble crash years, this index was running at 250 to 400,000 per week

19:02for years. Uh, it's basically really 30 to 90,000 range for the last five years. It will go down in

19:10history as the lowest new listings data ever recorded. Uh, but I was just hoping we'd get back

19:14so much to normal. So we did hit that normal level on a low end. We didn't get a lot of traction.

19:19We have a few weeks left, but seasonality is kicking in, uh, on our weekly data. So we're

19:25still showing year over year growth on our total pendings, our weekly pendings, purchase application

19:29data's, uh, uh, up 20 weeks in a row, 20 weeks in a row, year over year. We have seven double digit,

19:36uh, year over year. So there, there's some positive things on that, but again, the inventory data is the

19:41best story. It was very slow this week, this last week we had a holiday Juneteenth. So I'm always a

19:47little bit skeptical of holiday data when you're working with weekly. So we'll see what happens

19:51the next week, but clearly, uh, uh, the major sellers or forced sellers or anything like that,

19:59we're almost pretty much done for the seasonality of the year. That's just, uh, uh, not occurring.

20:04And this is with Doge happening. This is with, uh, budget cuts. This is with Godzilla tariffs,

20:10not Godzilla tariffs, baby Godzilla tariffs, King Kong coming on the side, whatever it is.

20:15There's been a lot this year. And even with all that, Sarah, people still applied for mortgages

20:22more this year than in 2024 and 2023 isn't spectacular. It isn't great. But this notion

20:29that American home buyers are like these soft cry baby men on X and YouTube and Tik TOK and all,

20:35no, they're not right. They can play ball, right? So it's, it's been a fascinating year on that side.

20:42If we were picking one movie to encapsulate this year, Godzilla versus King Kong does seem like it

20:49just from the amount of chaos, just from the fact that there are these chaos agents fighting each

20:54other and we're all sort of just watching going, okay, where does this land that that feels?

20:59Oh yeah. Oh yeah. Especially the last one where we got other monsters and crazy stuff all over the

21:04place. But, uh, you know, it, it, it, it, it, I I'm so this, this sounds crazy, but I just,

21:12I love this chaos. I love this chaos. Like my, my first thought is, Oh, I'm going to write a

21:17oil mortgage rate article before the market opens. Let's see who else wants to tackle that.

21:22Nobody wanted to touch that one, you know? So it's just, it's just fun because this is like,

21:27you really got to like know your stuff to kind of talk about the intricacies. Cause you,

21:32anybody can make a valid case on both sides. Oh my God. The 10 year yield is going to go up.

21:35Inflation is going to go up. Fed's going to have to hike rates or, Oh my God, the stock market's

21:39going to crash bond market. Money gets on the bonds yields or none of them either. Didn't happen.

21:44There's not much. Right. And again, if you didn't know that we had a bomb three nuclear facilities,

21:49you'd be like waking up. Oh, it's a Monday morning. Not much as, Oh my God, Michelle Bowman.

21:54She's dropped a bomb on me, baby.

21:58Oh my gosh. Perfect. Perfect song.

22:01For this. Oh my gosh. Um, so existing home sales, what'd we see there?

22:07Okay. The first thing that just made me smile more than anything. And it was funny cause it

22:11was three years. We wrote this article, the low inventory story is over. It is 100% gone

22:19three years ago. I think it was June two of, uh, uh, of that month in 2022. I talked about,

22:26you know, we have to set targets for inventory, getting back to at least what we perceive to be

22:32normal. And for the NAR data, the bottom end of 2019, 2019 was a five decade low in inventory,

22:40but it was a functioning marketplace, right? It is a functioning buyer versus seller marketplace. So

22:44we've got a target 1.52 to 1.93 million total active inventory. And if mortgage demand stays

22:52weak, we can get there, right? The whole mortgage rate lockdown inventory can't grow. It is not,

22:57that's, that's not how it works. It's taken three years, a little bit longer than I thought,

23:04but we had 1.54, of course, 2025, the seasonal high period, June, July, August. Uh, uh, that's

23:12the NAR is high inventory data that got to the bottom end of 2019. So just for all the grown ass

23:20men running around, yapping their maws on it's 2008. It's worse than 2008. The educated class reads,

23:27but we create charts that you could just visually see 2005 housing sales peaked 2007,

23:34that was an escalation of inventory, 2.5 million to 4 million home sales crash from 2005 to 2008 here.

23:44It's a whole different story. We had the fastest crash in home sales ever in 2022. Inventory never

23:51got back to the five decade average. 2023 inventory never got back to the five decade average. 2024

23:57inventory never got back to the five decade average. 2025, we're still not back at the five decade

24:03average. However, we're at a point to where the buyers and sellers, you know, months of supply,

24:08everything balance. This was the whole concept of team higher rates in early 21, 2021, 2022,

24:15all the way out to 2023. This, it took three years of the weakest, lowest home sales ever recorded

24:24history to just to get us here, but it's a more balanced market. It's not because we just have

24:29more choices. It's just that prices can't really escalate. And that is one way to help affordability

24:35as wages grow, price growth cools down, reminds me a lot of the 1980s, right? The only missing element

24:42here is, is lower rates. And even with elevated rates, purchase application is a, just imagine if

24:47rates went down to 6% for you, you get something better, right? So I'm happy. It took a little bit

24:54longer than I thought, but we got to the lower end, which, what you would prefer is to start a year

25:00at 1.52 million and get yourself up to about 2 million. Uh, that, that would be preferred, but I'm

25:06going to take whatever victory I can on inventory, uh, home sales beat estimates just a little bit.

25:11Just remember we've had every single month this year, the monthly existing home sales have been at

25:164 million or above. Um, and for the next five months, it's just simply going to be such a low bar

25:23on the year over your sales that we're going to show growth. And because of that, uh, uh, take

25:28that growth in context. Cause we're going to have some really, really low, uh, prints to work off

25:32of. I think when we look at inventory in the, for the low of 2022, which was like 240,000 for the

25:40entire country, we're, we're what, like three times that now. Well, that's the, our Alto state is a

25:45little bit different than any ours. Cause we just show pure single family homes that are, uh, not in

25:50contract or anything. So, uh, our, our inventory data is, is above, uh, 828,000. The low point for

25:57our data was 240,000 in 2022, all inventory data trends, the same. Everybody's got different models

26:03cause they have different, uh, how they calculate, but all of us are kind of at that 2019 low end

26:09inventory levels, which means it's a, it's a more balanced marketplace. This is beautiful. This is I,

26:14if I could, I'd paint this inventory chart. Now I cannot imagine how much happy I am because

26:19we finally get there and you don't have to worry because what happened is you cannot have a

26:23functioning housing market with active inventory that low. You just can't prices will still stay

26:28way too strong and it just kills affordability out there. Amazing. I cannot believe how much we

26:35had to talk about. We're, we're almost out of time. We got to go, but, um, we'll be on again in a

26:39couple, I'll have you on again in a couple of days. Thank you for all the weekend work, the night work.

26:44Uh, I love having someone who's on top of this 24 seven. It really, it really helps everybody. So thank

26:50you, Logan. Jack Bauer, econ 24 seven, baby. Me and Chloe are going to do it. Yeah. You've got Chloe

26:59on your side. We're all good. All right. Thanks, Logan.

27:02Thanks, Logan.

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