08/17/2026
Mortgage rates continue to hover just beneath one-year highs in what was a packed news week. Let’s discuss what happened and look into the week ahead.
Consumer Prices Tame
Consumer prices met expectations, providing some welcome news for the bond market. More importantly, the recent inflation trend continues to move in the right direction.
The month-over-month pace, along with the three-month or quarterly pace of inflation, is running at or below the Fed’s 2% target when viewed on an annualized basis. Should those trends continue, the likelihood of the Fed’s next move being a rate hike becomes more unlikely.
Adding to the encouraging inflation story was the very tame Producer Price Index (PPI), which measures inflation at the wholesale level…what businesses are paying for goods and services before those costs ultimately reach the consumer.
This matters because producer prices can provide a glimpse at inflation pressures coming down the pipeline. When businesses face rapidly rising costs, some of those increases can eventually be passed along to consumers through higher prices. Conversely, tame producer inflation helps reduce that pressure and can help keep consumer inflation at bay.
Taken together with the latest consumer inflation reading, this was another welcome sign for the bond market. If both producer and consumer inflation remain well behaved, it becomes increasingly difficult to make the case that higher interest rates are needed to combat inflation.
Bond Supply Limits Improvement
While inflation helped bonds, Treasury supply limited the improvement. The market had to digest a large amount of new Treasury issuance. There is a saying in the markets: “Bonds Hate More Bonds” as the increased supply weighs on prices and pushes rates higher. Our deficit spending and need to create more bond supply remains an important headwind for bonds and mortgage rates.
Oil Prices Ease
Oil continues to hover around $80, well off its recent highs but still above the high-$60s level seen when the U.S. and Iran conflict commenced. Oil remains a key focal point for mortgage and housing professionals because, as oil goes, so often go long-term interest rates like mortgages.
Breaking a 19-Year Trend?
A trend that has existed for 19 years is threatening to be broken.
Back in 2007 was the last time the 10-year Note touched 4.60% and then, three months later, traded above 4.60%. It appears that streak could end unless the 10-year dips and stays beneath 4.60% by August 19.
That makes 4.60% an especially important level to watch.
30-Year Mortgage Rates and 10-Year Note
30-Year Fixed Mortgage Rate (Freddie Mac daily average, August 13, 2026)
• Rate: ~6.67% (current average 30-year fixed rate)
• Change from Previous Week: down from ~6.69% (week ended August 6, 2026)
• Change Year-over-Year: up from ~6.58% on August 14, 2025 (Freddie Mac)
10-Year Treasury Note Yield (daily close, August 13, 2026)
• Yield: ~4.64%
• Change from Previous Week: down from ~4.66% (week ended August 6, 2026)
• Change Year-over-Year: up from ~4.24% on August 13, 2025
Looking Ahead
There are no real high-impact economic reports ahead, but we will receive the Minutes from the previous Fed meeting. The Minutes provide a more detailed look inside the Fed’s discussion, what officials were thinking, what risks concerned them and how they viewed the path forward for monetary policy.
We’ll also hear plenty of Fed speak. That could be especially interesting after three officials dissented from the decision to hold rates at the last meeting. With recent jobs reports coming in light and inflation easing, listen closely for whether more Fed officials begin backing away from the notion that the next move could be a rate hike.
For now, keep watching the 10-year at 4.60%, oil and the Fed. They could help determine whether bonds can build on this week’s inflation-friendly news.
Mortgage Market Guide Candlestick Chart (1st Picture)
Each candle represents one day of trading. As mortgage bonds prices move higher, rates move lower. You can see on the right side of the chart, how mortgage bond prices have moved sideways for the past month, just above the price lows of the year.
Chart: Fannie Mae 30-Year 5.5% Coupon (Friday, August 14, 2026)
Economic Calendar for the Week of August 17 - 21 (2nd Picture)
Remember FED minutes come out on Wednesday! Could be a big mover!
