**WTMS Blog Today = What’s up in Mortgage Today (AM) – 08/26/2026**
PCE inflation data arrived slightly hotter than expected, triggering an immediate bond market selloff that pushed mortgage-backed securities down and the 10-year Treasury yield up 2.4 basis points to 4.65 percent. Headline PCE prices rose 0.2% monthly versus a 0.1% forecast, while core inflation came in exactly at expectations at 0.2% monthly and 3.3% annually. The market’s negative reaction suggests traders had positioned for softer inflation, leaving little room for disappointment.
UMBS 5.5 coupons slipped 0.17 points, and GNMA securities followed suit with comparable weakness. This morning’s data reinforces the Fed’s hawkish stance heading into September. Mortgage applications declined 1.0% last week as the 30-year fixed rate climbed to 6.78 percent—its highest level in three weeks.
Refinancing activity dropped 2% week-over-week and 17% year-over-year, becoming the primary headwind on the application index. Purchase applications held relatively steady but remain 5% below year-ago levels, signaling that rising rates continue to pressure buyer demand. The roughly 20-basis point increase in mortgage rates over the past two months is beginning to squeeze the origination pipeline.
Risk-averse loan officers should consider locking committed borrowers today. Durable goods orders jumped 1.1% in July, crushing economist expectations of 0.5% growth and signaling strength in equipment and machinery demand. Meanwhile, second-quarter gross domestic product confirmed at 1.5%, matching forecasts but marking a deceleration from 2.1% growth in the prior quarter.
Personal spending rose 0.2% against a 0.1% estimate, while personal income surged 0.4% versus the 0.2% expectation. These mixed signals—strong orders balanced against moderating growth—create uncertainty for the Federal Reserve’s next move. The Jackson Hole Symposium later this week may provide clarity on policy direction.
New home sales collapsed 10.5% month-over-month in July to a 607,000 annualized pace, pushing inventory higher and stoking fears of price pressure ahead. Consumer confidence fell to its lowest level of 2026, even as the Case-Shiller home price index rose 2.1% year-over-year. The FHFA index, meanwhile, held flat, suggesting demand is cooling faster than valuations.
This divergence points to an increasingly bifurcated housing market where some borrowers face affordability stress while others maintain equity cushions. Lenders focusing on recapture strategies through home equity lines and seconds are well-positioned for the current environment. Oil prices extended their weekly decline, falling 2.2% to $80.58 per barrel as Iran and Oman work toward a deal to resume shipping through the Strait of Hormuz.
This easing of geopolitical risk has temporarily calmed inflation fears, though energy remains a wild card for Treasury markets. The week’s $70 billion 5-year note auction closes today, and the results could signal whether demand for intermediate duration bonds is holding up. Crude oil inventories round out the afternoon calendar.
Treasury buyback programs have provided support, but fundamental forces—deficits, issuance, and growth—continue pushing yields higher. Today’s market action hinges on whether this morning’s disappointment in PCE motivates additional selling or attracts value-hunting buyers near current levels. The 10-year yield must break below 4.62% to signal a genuine trend reversal; failure to do so keeps the ceiling intact.
With Nvidia earnings looming after the close and the Fed symposium kicking off later this week, traders appear content to hold relatively flat positions. This uncertainty creates opportunities for disciplined originators to counsel risk-averse borrowers to lock. Market directional moves on war and fuel prices remain unpredictable.
**Locking vs Floating**
Today marks the first meaningful challenge to the uptrend since late July, with the potential to test bond market conviction. Risk-averse clients should use any intraday strength to lock in rates, while risk takers may wait for confirmation below the 4.62% yield floor before committing. The 20-basis point rise in mortgage rates over two months is already weighing on purchase demand, making immediate locks prudent for committed pipelines.
**Today’s Events**
Core PCE (m/m) (Jul): 0.2% vs 0.2% forecast, 0.1% prior
Core PCE (y/y) (Jul): 3.3% vs 3.3% forecast, 3.3% prior
Durable Goods (Jul): 1.1% vs 0.5% forecast, 0.3% prior
GDP Q2: 1.5% vs 1.5% forecast, 2.1% prior
PCE (y/y) (Jul): 3.7% vs 3.6% forecast, 3.7% prior
PCE Prices (m/m) (Jul): 0.2% vs 0.1% forecast, -0.1% prior
**Bond Pricing**
**UMBS 30 yr**
| Coupon | Price | Intra-Day Change |
| 5.0 | 97.07 | -0.27 |
| 5.5 | 99.45 | -0.22 |
| 6.0 | 101.47 | -0.15 |
**GNMA 30 yr**
| Coupon | Price | Intra-Day Change |
| 5.0 | 97.39 | -0.26 |
| 5.5 | 99.73 | -0.13 |
| 6.0 | 101.53 | -0.15 |
**Treasuries**
| Term | Yield | Price | Intra-Day Yield Change |
| 2 yr | 4.224 | 99.812 | 0.050 |
| 3 yr | 4.285 | 99.903 | 0.044 |
| 5 yr | 4.382 | 99.969 | 0.053 |
| 7 yr | 4.505 | 99.226 | 0.042 |
| 10 yr | 4.663 | 99.696 | 0.034 |
| 30 yr | 5.186 | 99.080 | 0.019 |
