Issue 166 - Hello and Happy Tuesday,

The Jobs Report Did Its Job. Now It's CPI's Turn.

Last week handed us the weakest jobs report in years. The economy lost 23,000 jobs in July, well below the forecast for an 80,000 gain. May and June were also revised lower by a combined 103,000 jobs. That is a labor market cooling on its own. Mortgage bonds held support and MBS Highway opened this morning with a float recommendation. Those are good signs. But rates have not broken lower yet, because the bond market is waiting on Wednesday.

Here is the problem. Oil jumped 3% this morning because the Strait of Hormuz disruption has not been resolved. Higher oil means higher energy prices, and energy prices are a big part of what keeps inflation elevated. The market still prices in a 46% chance of a Fed rate hike on September 16th. That probability is the ceiling keeping bonds stuck and rates near multi-year highs.

Wednesday's CPI report is the week's defining moment. Forecasters expect headline inflation to cool from 3.5% to 3.4%, with core dropping from 2.6% to 2.5%. If shelter costs stay as tame as they were in June, core could come in even friendlier. A soft CPI reading could be the catalyst that finally pushes bonds through their ceiling and gives buyers the rate relief they have been waiting for all summer.

Tell your buyers: float through Wednesday. A soft CPI reading could be the best rate news of the summer.

Personal Note:
Took Grayson mini golfing last week when other plans fell through.

We had a great time in the sun together!

TLDR

• 📉 RATES - July's jobs report showed a loss of 23,000 jobs, well below expectations, helping bonds hold support; Wednesday's CPI is the next test that could finally push rates lower.

• 🚨 WILDCARD - Oil jumped 3% this morning with no resolution on the Strait of Hormuz, keeping inflation fears alive and a 46% chance of a September Fed rate hike on the table.

INTEREST RATES
Rates 📢 August 11th, 2026

Rate data as of morning of publication. Unless noted otherwise, all scenarios are assuming 30 Year-Fixed mortgage, Purchase or R/T Refinance. No origination points charged, 780 FICO score, and 20% down payment. *Most HELOCs are variable-rate lines of credit based on the Wall Street Journal Prime Rate (currently 6.75%) plus a margin that varies by program, credit profile, and combined loan-to-value. GTG Financial offers multiple HELOC programs through its wholesale lending partners. Contact us for a personalized quote. Provided for consumer education only and does not serve as a binding offer to extend lending. Payment period, interest rate, APR, and other terms subject to income, asset, and credit profile qualification. Provided courtesy of GTG Financial, Inc. NMLS 1595076. Equal housing opportunity. www.nmlsconsumeraccess.org

⏱️ Rates in 60 Seconds

📉 The jobs report flipped the story on Friday. The government reported the economy lost 23,000 jobs in July. Most forecasters were expecting a gain of more than 80,000. Then it got worse. The government also went back and cut its job counts for May and June by a combined 103,000. Hiring that looked healthy all spring turned out to be a lot weaker than anyone thought.

📊 Bond investors reacted fast, and that is what moved rates. Here is the chain. A weakening job market makes it harder for the Fed to argue for raising rates. When investors believe a hike is less likely, they buy bonds. More bond buying pushes bond yields down. And when the yield on the 10 Year Treasury drops, mortgage rates usually follow it. That is exactly what played out Friday afternoon.

🔑 Realtor Insight: The unemployment rate went down last month, and almost everyone will read that as good news. It is not. It fell because roughly 264,000 people stopped looking for work, which shrinks the count of who is considered unemployed. The share of Americans working or job hunting is now the lowest it has been in more than five years. Bond investors saw straight through the headline, which is why they moved the way they did. Being able to explain that makes you the person who read the report, not just the headline.

📅 What to watch this week:

• Wednesday: July inflation data (CPI). This is the one that matters. The Fed has been far more worried about prices than jobs, and a hot number could put a rate hike right back on the table.

• Thursday: Wholesale inflation (PPI), an early read on where consumer prices are headed next.

• Friday: Retail sales and consumer sentiment, for a look at whether shoppers are still spending.

INDUSTRY
Your Tax Write-Offs Could Be Blocking Your Mortgage

Here’s the trap that catches self-employed borrowers every year. The more aggressively you write off business expenses, the lower your adjusted gross income looks on your tax returns. Lenders qualify you on that number — not your gross revenue, not your bank deposits. The number after all the deductions.

A great tax year can quietly turn into a rough mortgage year. The good news: there are programs built for exactly this situation — bank statement loans, P&L-based underwriting, and 1099 programs that qualify you on what you actually earn, not just what the IRS sees. Watch the 60-second breakdown:

Real deal example shared for educational purposes. Individual results, structures, and terms vary.

TECHNICALS
CPI Week: Two Forces Fighting Over the Next Rate Move

Two things are pulling mortgage rates in opposite directions right now. In one corner: the weakest jobs report in years and a labor market cooling on its own. In the other: oil prices up 3% this morning and a Fed that has not ruled out a September rate hike. Wednesday's CPI report is the tiebreaker.

The force pushing rates DOWN is the jobs market. July showed a net loss of 23,000 jobs against expectations for an 80,000 gain. May and June payrolls were revised lower by 103,000 combined. ADP private payrolls came in at just 44,000 for July. Full-time employment fell 106,000 while part-time rose. These numbers show a labor market cooling without the Fed's help. Mortgage bonds are holding support at 101.39 and the 10-year Treasury is trading near 4.65% to 4.69%, sitting in the middle of its range and waiting for a catalyst to move lower.

The force pushing rates UP is oil and the Fed. Crude prices rose 3% this morning because there has been no progress on reopening the Strait of Hormuz. Higher oil feeds directly into headline inflation, and that gives the Fed's hawks cover to argue for more hikes. Three Fed members already voted to raise rates at the last meeting. The market prices in a 46% chance of a hike at the September 16th meeting. MBS bonds are stuck just below their 25-day moving average, which has acted as a hard ceiling for five straight days. Until bonds clear that level, rates cannot move meaningfully lower.

Buyers should float through Wednesday. If CPI lands at or below forecast, be ready to lock fast. Good news moves quickly in bond markets.

👀 Watch this: Wednesday CPI Report - a core reading of 0.2% or below would be a big win for bonds and could break the 10-year through support; a hot print above 0.3% hands the hawks their argument and keeps rates stuck.

Also worth knowing:

• Home values rose 0.3% in June and are up 1.2% year-over-year per Cotality. A home bought for $500,000 in May has appreciated roughly $8,000 in four months. Homeownership is still building wealth even at today's rates.

• Existing Home Sales come out Tuesday. Not a rate driver, but a signal of fall market activity worth watching.

• Continuing unemployment claims sit at 1.8 million, meaning workers who lost jobs are taking longer to find new ones. Another sign the labor market is genuinely cooling.