08/24/2026
MARKET UPDATE: The 10-year Treasury yield is presently 4.700% which is lower than where it closed Friday afternoon, but slightly higher than Friday morning when the Friday rate sheet was priced.
The top market news is that the United States has announced an “Economic D-Day” on Iran by utilizing the largest number of economic sanctions ever assembled on another country. U.S. Treasury Secretary Scott Bessent stated that the sanctions are intended to “sever every economic lifeline” that sustains Iran. Any country that does financial transactions with Iran will face having their companies or their country cut off from the dollar based financial system.
The move is intended to pressure Iran to end the attacks on ships transiting the Persian Gulf and the Red Sea and also to stop Iran’s attacks on neighboring Gulf states. Iran has restated that they would renew attacks on ships and other Gulf countries in response to any new economic sanctions.
Oil prices have dropped this morning from Friday’s closing prices, with West Texas Intermediate crude oil presently at $85.25 down about $1.81 from Friday’s closing price. Lower oil prices reduce future inflation pressures, which pushes bond yields down worldwide.
There were no material scheduled economic reports today. Oil prices are the top driver of today’s bond market prices. Tomorrow we will see Consumer Confidence for August, with the markets predicting a 90.2 down from the 90.8 in July. Lower consumer confidence generally correlates to reduced economic activity, which usually is negative for stock prices and pushes up bond prices, pushing down bond yields.
Wednesday will be the key day this week for scheduled economic reports. The Core PCE inflation report for July will be released with the markets expecting the Core PCE inflation will show a 0.2% monthly increase and a 3.3% annual rate. This compares to the 0.1% monthly increase and 3.3% annual rate in the June report. If the monthly increase is higher than expected this will push rates higher and the opposite if it comes out lower than expected.
Also, on Wednesday we will get two important reports that will provide insight to the future direction of the economy. The Durable Goods report is expected to show a 0.5% increase as of July. Durable goods are considered to be discretionary expenses, so when these increase, it indicates increased optimism in the direction of the economy.
The second estimate of GDP for the second quarter of this year will be released, and the markets expect it will show 1.5% which would be the same as the initial estimate. Because the calculation of GDP for a quarter of the year is so complex, the Bureau of Economic Analysis releases two estimates and then provides a final estimate over a 90-day period.
If either or both of the two latter reports come out higher than predicted, this would indicate a stronger-than-expected economy and this would be good for stocks and bad for bond prices, pushing rates higher. The opposite would happen if both of these reports come out worse than expected. In a slowing economy there is less demand for borrowing and also inflation pressures usually decline, with a net impact of interest rates moving lower.
As a reminder, the Fed’s decision to raise or lower the Fed Funds rate only impacts the rates for 1-day loans made between banks with excess cash and those that want to borrow cash. This rate impacts a bank’s short-term cost of funds and helps push all short-term rates higher. But usually has little or no impact on mortgage rates which are based upon the prices of longer-term bonds such as the 10-year Treasury and MBS bonds.
Floating this Week?
A borrower who chooses to float this week is hoping for four things to happen:
1. The PCE inflation report shows a Core PCE increase of 0.2% or lower.
2. The Durable Goods report comes out lower than the 0.5% predicted July increase.
3. The second estimate of GDP comes out flat or lower than 1.5%.
4. Oil prices do not increase above their current $85.25 for WTI crude oil.
The first three have a 50% probability of each number coming out lower rather than higher than predicted.
Oil prices this week could be volatile due to the impact of the just announced “D-Day Sanctions” and it is impossible for anyone to predict which direction they will go, how much they will go, and what days they will go up or down. Predicting oil prices being higher or lower one hour from now or one day from now is also a 50/50 probability.
Nobody, including the most intelligent and experienced geniuses on Wall Street can predict if floating is a good or bad idea for any week better than a 50/50 ratio of being correct. To do so would require a person to be able to predict the next day’s bond market movement better than a 50/50 ratio, which nobody could do any better than attempting predict a heads or tails when a coin is flipped.
A borrower floating this week is taking a 50/50 bet of getting a better or worse rate sheet during a time period where the markets could have very volatile. Very possible a worsening of a mortgage lender’s rate sheet occurs first thing in the morning before the first daily rate sheet is posted, and it is too late for the borrower to lock yesterday’s better price.
Floating the market when the markets are very volatile is a 50/50 bet of getting a better or worse rate sheet.
This Market Update and similar such communications are for informational purposes only and are based on publicly available information. These materials are general communications, which are not impartial, and are provided solely for discussion purposes, and not in connection with any product or service offering. The opinions and views expressed in this Market Update are as of the date of this communication and are subject to change. Any forward-looking views and statements contained in this Market Update are based on current estimates or expectations of future events or results. Actual results may differ materially from those described in this Market Update. The views expressed in this communication should not be attributed to Guild Mortgage Company as a whole and may not be reflected in the strategies and products offered by Guild Mortgage Company.
