Jumping Rates Hit Refis

Is it me or does it seem like every time it feels like we have put the worst behind us something else happens?  Mortgage rates have started to jump recently due to inflationary worries.  Only a few months ago we were more concerned with deflation.  The American public must be wondering 'what the heck is going on?'  In my opinion, the recent unrest in the Middle East, while fascinating and in the long term positive, is allowing shrewd speculators to venture into and I am sorry, manipulate the commodities markets.  Just back in 2008 we saw something similar as corn, oil and other commodities appreciated at meteoric rates.  We all know it was investment banks and large hedge funds driving it and there was supposed to be limits on speculative positions in some commodities, namely food, to stop this.  Have they been put in place yet?

While Libya represents only 2% of the world's oil supply, prices increases in the oil markets have far exceeded that and are up around 14%.  This when Saudi Arabia can make up for any supply interruptions of this size.  So what is going on and why should it matter and what in the world does this have to do with real estate?

Well if oil goes up and stays up, the cost of everything, farming, transportation of goods, materials made of plastics, everything starts going up and a 'cycle' of inflation can occur.  Bond markets price the risk of future inflation and if they, the bond investors, see inflationary worries, they pull back and bond prices fall.  Since interest rates are inverse to bond pricing, the rates start to climb until they are high enough to entice enough buyers into position to create stasis.  Mortgage rates are closely tied to the 10 year U.S. Treasury note. So there you go. 

My fear is that if speculating drives oil prices too high for too long, any momentum we have started to seen in real estate will be quashed.