What’s Happening?
All news below is color-coded as “good“, “bad“, or “neutral” for mortgage rates.
Summary: Rates are flat on the month but were up by 0.25% during the middle of the month. Rates have recovered since then and the latest rounds of peace talks have helped ease markets for now.
•Geopolitics (improved, but still bad for rates): We’re in a few weeks into a 60-day ceasefire and progressing peace talks. If this one sticks, the Strait opens up, and oil prices fall, we’ll see mortgage rates improve.
•Brent Crude Oil Prices (bad for rates while elevated): Brent Crude started the year at $60.24, was $72.29 the Friday (Feb 27th) before the attacks on Iran, and is up 16% since then. Prices peaked at 63% higher ($118) since Feb 27th, so we’re off that recent peak. Oil prices affect all aspects of the economy and interest rates are expected to remain elevated as long as the oil price does too, though we have seen some relief as oil prices have come down.
•New Federal Reserve Chair (unclear for rates): The new Fed Chair, Kevin Warsh, started on May 15th. He inherited a central bank under political pressure to cut rates and an inflation problem that won’t likely bring those cuts that Trump has been pushing for. Not until we see the price of oil hold for several months below the pre-war high of ~$70/barrel.
Fed funds futures are predicting no rate cuts in 2026 and possible rate hikes into 2027. Predictions over 6 months away are not accurate and lots will change before then, so rate hikes are NOT a foregone conclusion.
•Jobs Report (neutral for rates): The BLS jobs data from April came in stronger than expected, with 115,000 new jobs instead of the 65,000 that were expected, although unemployment stayed at 4.3%. Normally, job market strength pushes rates up, but this month the market shrugged off that data.
•Unemployment Metric (neutral for rates): Unemployment in April remained at 4.3%. There hasn’t been any meaningful change in this metric in 2026, having little effect on rates.
•Inflation Report (bad for rates): The CPI (inflation) report covering April reported the annual inflation rate is 3.8%, the highest we’ve seen in three years, and is expected to push higher the longer this mess with Iran continues. Energy and oil prices continue to lead the way and were up 3.8% MONTHLY, compared to “all items” rising 0.6%.
