Continuing the theme from earlier this week, the 10-year Treasury yield, which closely tracks mortgage rates, keeps pressing against a key support level. It’s tested that floor multiple times, and momentum suggests a potential break lower next week.

Geopolitical events, particularly involving Iran, could trigger a classic flight to safety into bonds, pushing yields down further. However, because Iran is part of OPEC, any escalation could also drive oil prices higher. That creates a competing pressure: rising energy costs can fuel inflation, especially since transportation and manufacturing remain heavily dependent on oil.

In short, bonds are leaning toward lower yields, but oil and inflation risks could complicate the move.

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