| The U.S. Treasury Bond market sold off this week, which in turn caused interest rates and mortgage rates to move higher. Investors became concerned that rising energy costs and the recent uptick in inflation could delay future Federal Reserve rate cuts. When inflation fears increase, bond prices typically fall, pushing bond yields and mortgage rates upward as lenders demand higher returns to offset the risk of inflation by reducing the future value of those fixed payments. It’s been up and down with bond yields and mortgage rates based on events in the Middle East.
Should tensions calm bond yields and mortgage rates could drop back to where they were in recent weeks. It’s unlikely that they will quickly drop back to their 3-year low just before the conflict started in the near term, but they will moderate. Home sale data for April will be released next week by the California Association of Realtors and the National Association of Realtors. We tabulate the data from the same sources around the 8th of each month so you can get that data now from our website RodeoRe.com for your city or zip code. Mortgage rates jumped at the end of the week – Every Thursday, Freddie Mac publishes interest rates based on a survey of mortgage lenders throughout the week. The Freddie Mac Primary Mortgage Survey reported that mortgage rates for the most popular loan products as of May 14, 2026, were as follows: The 30-year fixed mortgage rate was 6.36%, nearly unchanged from 6.37% last week. The 15-year fixed was 5.71%, nearly unchanged from 5.72% last week. Unfortunately, rates jumped at the end of the week. The 30-year was closer to 6.65% on Friday. The graph below shows the trajectory of mortgage rates over the past year.
The Consumer Price Index jumped to a 3-year high inflation rate in April – The Consumer Price Index released this week. It showed that consumer prices for all goods increased 3.8% year-over-year, the highest annual inflation rate in three years. Just a few months ago, in February 2026 before the war began, inflation had fallen to 2.4%, its lowest annual rate in three years. After the war started, the CPI rate jumped from 2.4% in January and February to 3.3% in March and 3.8% in April. Fortunately, core inflation, which excludes food and energy, came in at 2.8%. That indicates that, at least for now, much of the recent increase in inflation is being driven by higher gas and energy prices rather than broad-based inflation throughout the economy. Analysts remain hopeful that overall inflation could begin to moderate again once tensions in the Middle East and the Strait of Hormuz is fully reopened to unrestricted oil shipments. One fifth of the of the world’s oil supply passes through that region. Any disruption can quickly impact energy prices worldwide and, in turn, inflation here in the United States.
Stock markets – The Dow Jones Industrial Average closed the week at 49,526.17, down 0.2% from 49,609.16 last week. It is up 3% year-to-date from 48,063.29 on December 31, 2025. The S&P 500 closed the week at 7,408.50, up 0.1% from 7,398.93 last week. The S&P is up 8.2% year-to-date from 6,845.50 on December 31, 2025. The Nasdaq closed the week at 26,225.15, down 0.1% from 26,247.08 last week. It is up 12.8% year-to-date from 23,241.99 on December 31, 2025. U.S. Treasury Bonds – The 10-year treasury bond closed the week yielding 4.59% up from 4.38% last week. The 30-year treasury bond yield ended the week at 5.12%, up from 4.99% last week. We watch bond yields because mortgage rates follow bond yields. Have a great weekend! |
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