08/14/2026
Friday, August 14, 2026 ā Week in Review & Week Ahead
This morning gave the bond market two more reasons to believe the economy may be losing some momentum. July retail sales fell 0.6% versus expectations for a 0.1% increase, while the important control group fell 0.4%. Then University of Michigan Consumer Sentiment came in at just 51.0 versus 54.5 expected and 55.2 last month. That is a significant deterioration in consumer attitudes and reinforces the message from retail sales that the consumer may be becoming more cautious.
Taken together, letās score this week as positive for bonds and somewhat positive for mortgage rates. CPI was relatively cooperative at 0.1% month over month and 3.4% year over year, PPI was softer at the headline level, and we finished the week with weaker retail sales and consumer sentiment. The 10-year continues to tread water, trading around 4.66%, but importantly, we still haven't convincingly broken our 4.60% floor.
Next week shifts the focus from inflation toward housing, growth and the Fed. Tuesday brings housing starts, building permits, industrial production and pending home sales, while Wednesday's FOMC minutes should give us a better look at the debate inside the Fed. The question will be whether the Fed views this week's softer inflation and consumer data as the beginning of a trend or simply another set of numbers in an economy that remains resilient.
Lock/Float Recommendation
Bias: Cautiously Float. With the 10-year around 4.66%, but slowly trending towards our 4.60% resistance/support level to give floating a little more room. The economic data are increasingly leaning in our favor, and today's weak retail sales and consumer sentiment strengthen the case for lower yields. However, 4.60% remains the line in the sand. If we can break through 4.60% and hold below it, I would become more aggressive about floating because that could open the door to another leg lower in yields and better mortgage pricing.
If the 10-year rejects 4.60% and starts moving back toward 4.67%ā4.70%, I would use that as the signal to lock rather than give back this week's improvement.
My Conclusion: Float cautiously while we're testing 4.60%, but don't confuse a test with a breakout. Let the bond market prove it can get through the floor before getting too aggressive.
