Issue 155 - Hello and Happy Tuesday.

Rate cuts were already starting to look like a long shot for this year, even with Trump’s hand-picked man (Kevin Warsh) stepping into the Fed Chair seat.

After this morning's CPI print, they got longer. The headline number climbed as expected. The bigger story is core climbed too, and that is the part that puts pressure on the Fed.

Personal Note:
Got back from Hawaii after being there for a week. Had a good time with the family, but were happy to be back in the swing of things here on the home front!

TLDR (Too Long Didn’t Read) Summary

• ⬆️ RATES - Edging Upward.

• 💵 INDUSTRY - Every $1000 = $7 Monthly?

• 📊 TECHNICALS - CPI Coming In HOT.

INTEREST RATES
Rates 📢 May 12th, 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. 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

🛢️ Oil is back in the driver's seat, and California feels it first. Iran rejected the latest peace memo from the Trump administration, and the Strait of Hormuz remains effectively closed. California refineries are built to process the heavy crude that comes from the Middle East, not the lighter crude out of Texas. When that supply gets squeezed, gas prices climb, inflation expectations climb with them, and mortgage rates follow.

📊 CPI lands Tuesday, and it will not be friendly. The Consumer Price Index is the headline inflation report markets watch most closely. The headline number is expected to jump to 3.6% or 3.7%, up from 3.3% last month, with most of the increase tied to oil. Anything hotter and the rate picture gets uglier in a hurry.

👀 What to watch this week: CPI on Tuesday, PPI on Wednesday, Retail Sales and Jobless Claims on Thursday. A hot week of inflation data pushes rates higher from here. A friendly week brings back some of the relief we lost this morning.

🎯 Realtor insight: Conventional ticked up this week, but FHA and VA held flat. For buyers stretching to qualify, that gap matters more than usual right now. Pair it with growing inventory and the negotiating leverage that comes with it, and the right buyer has a real window here, even with conventional rates climbing.

INDUSTRY
How Much Does an Extra $10k Help Your Payment?

Downpayment strategy often rules the day!

TECHNICALS
CPI Came In HOT. Both Numbers.

April CPI dropped this morning at 5:30 AM PT and came in above forecast on both fronts. Headline jumped to 3.8% year over year, the highest reading since May 2023. Core inflation, which strips out food and energy, climbed to 2.8%. That second number is the one bond markets did not want to see, and rates have been pushing higher since.

Freddie Mac PMMS (week ending May 7, 2026)

• 📈 30-year fixed: 6.37% (up from 6.30%)

• 📈 15-year fixed: 5.72% (up from 5.64%)

• 📉 One year ago, 30-year: 6.76%

Why CPI moves rates. Mortgage rates come from bonds, which pay investors a fixed amount over time. When inflation runs hot, those future dollars buy less, so investors demand higher returns to lend. Higher returns mean higher rates. When inflation cools, the opposite happens. That is why every CPI release can move rates the same day.

April CPI (released this morning)

• 🛒 Headline: 3.8% YoY (forecast was 3.7%, March was 3.3%)

• 🎯 Core: 2.8% YoY (forecast was 2.7%, March was 2.6%)

• 📊 Monthly headline change: +0.6% (in line with forecast)

• 📌 Highest annual headline reading since May 2023

The energy story got bigger. Energy was the main driver again, but pressure is now showing up in core too.

• 🛢️ April gasoline: +28.4% YoY (up from +18.9% in March)

• ⚡ April energy: +17.9% YoY (up from +12.5% in March)

• 🔥 Fuel oil: +54.3% YoY

• 🔍 Core CPI 2.8%, the highest annual core reading since September

• 📊 Energy accounted for over 40% of the monthly headline increase

The core number moving up is the part that matters most. When inflation pressure spreads beyond energy, the Fed has less room to ease.

California market context

• 🏠 CAR 2026 forecast median: $905,000 (+3.6% YoY)

• 📊 Active listings expected up nearly 10%

• 💰 A $750,000 home appreciating 3.6% over 12 months gains roughly $27,000 in equity

Watch this: This print pushes rate cut expectations further out, and some traders are now pricing in the possibility of rate hikes next year. PPI Wednesday and retail sales Thursday are the next two tests. PPI tends to mirror CPI direction, which means another hot print would put more pressure on bonds. If you have buyers locked in or close to locking, today was the day to do it.