What’s Happening?

All news below is color-coded as “good“, “bad“, or “neutral” for mortgage rates.

Summary: The re-emergence of conflict with Iran is stirring things up again. Oil prices continue to wipsaw and is the key driver in marjet data and movement. A barrle of Brent Crude topped $100 again in July but has since recovered and we’re staring down 1-2 Fed rate hikes before the end of 2026.

•Geopolitics (bad for rates): The MOU (peace deal) with Iran fell apart in the 2nd week of July when Iran attacked a small group of 3 tankers in the Strait of Hormuz, apparently for using a non-Iran-approved route through the Strait. The US responded with retaliatory strikes on Iranian air defense systems, coastal radar, and fast boats. The US also revoked the sanction waiver that was going to allow Iran to continue selling its oil. Traffic in the Strait of Hormuz has again stalled to a near standstill; passage is down to only a few ships per day instead of the usual 125+.

Yemen’s Houthis have entered the conflict by threatening a Red Sea maritime blockade and launching missile strikes on Saudi oil tankers. If the Red Sea were blocked, that would also block the Suez Canal, which is the most important shipping route on earth and would be catastrophic.

•Brent Crude Oil Prices (bad for rates, but getting better): Brent Crude prices have surged along with the Iran conflict. Prices fell to $70/barrel with the peace deal and surged to $102 once the missiles started firing again. July closed at $90.12/barrell and is down to $79.36 as of August 4th, 2026.

•Federal Reserve Action (bad for rates): The Federal Reserve met in late July 2026 and left the Fed Funds rate unchanged. The vote to leave rates unchanged was a 9–3 split. The next meeting is mid-September and markets are pricing in a ~60% chance of a 0.25% hike as of now. Rates are already reflecting that expected hike, so if that ends up being the only expected hike this year, we’ll likely see rates stay relatively stable (within 0.125-0.25%) for the rest of 2026. The Fed Funds futures markets are predicting 1-2 rate hikes of 0.25% before the end of 2026.

•Inflation Report (good for rates): The latest CPI report for June, showed DEFLATION month over month. The “all items” CPI showed -0.4% from May to June, bringing the annual CPI print to 3.5%. May showed year-over-year 4.2%, April 3.8%, and March 3.3%. It’ll come as no shock to hear that the 25% drop in oil prices in May is the key driver of this lower CPI print. The prices of most other goods & services are up 0.1% – 0.2% month over month, but gasoline and fuel oil prices that consumers paid fell ~9%, causing the CPI to show an overall drop in prices. This report came out right after the restart of Iran escalation and oil prices have surged up to 40%+ since then but changes wildly based on the day.

•Jobs Report (good for rates): The June jobs report came in softer than expected, with only 57,000 new jobs created versus the 115,000 that were forecast. Weak jobs numbers can push rates down a bit.

•Unemployment Metric (bad for rates): Unemployment in June dropped a bit to 4.2%, which was lower than the 4.3% that was expected. Unemployment in May was 4.3% and this metric has been very flat in 2026. Falling unemployment shows labor market strength, which can push rates up. The opposing Jobs and Unemployment data points seemed to have balanced each other out in terms of rate effect.

12 Month Rate Chart: Conventional 30yr Fixed

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