Global Bond Markets Are in Meltdown—Here’s Why U.S. Homebuyers Should Pay Attention

As U.S. homebuyers scrutinize the surge of mortgage rates and debate the Federal Reserve's next move, an even bigger story has been unfolding across global trading floors that directly affects Americans' pocketbooks.For the past month, global bond markets have been in the grips of a historic sell-off triggered by a tangle of complex economic issues ranging from the ongoing war in Iran to rising deficits to the race to build out data centers to power artificial intelligence.While at first glance it might seem that the realm of high finance is far removed from homebuyers' affordability hurdles and climbing monthly mortgage payments, these market moves are a key factor influencing housing costs.One thing to keep in mind is that the Federal Reserve does not directly set mortgage rates. The central bank instead controls the overnight rate for lending between commercial banks, while mortgage rates are set by the free market.Mortgage rates closely follow the 10-year Treasury yield, which moves in response to inflation signals and other signals about financial conditions. Persistent war-related oil shocks, with Brent crude topping $100 per barrel, have fueled worldwide inflation fears this...