Mortgage Rates Today, August 10, 2026: Jobs Report Sends Rates Lower But Mid-East Tensions Moderate Fall

The bigger picture

Normally, mortgage rates fall much further than they did on Friday when a jobs report comes in as disastrously as July's did. But fading optimism over a Middle East peace deal likely limited the report's impact.

It's largely been the hope of an imminent peace deal with Iran that, by Friday evening, had helped mortgage rates fall to their lowest level since Jul. 21. But PBS reported on Friday that a wide gap still exists between the two sides, centered on control of the Strait of Hormuz. Scroll on down for more on how the conflict continues to affect mortgage rates.

With inflation foremost in investors' minds, Wednesday's consumer price index (CPI) could move mortgage rates appreciably if its figures surprise markets sufficiently. There are no economic reports scheduled for today.

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What's coming up?

Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning the war, employment, inflation, tariffs, and deficit funding are especially influential at the moment.

The war and mortgage rates

Peace talks with Iran or mediators have been underway since Aug. 1, and have helped mortgage rates fall moderately over their duration. While we all know how fragile such negotiations are and how hard it is to make deals stick, markets have seemed happy to work with the hope of an end to the conflict. However, that hope might fade now we know how wide the gap is between the two sides.

On Sunday morning, The Wall Street Journal reported:

"WASHINGTON — For weeks, President Trump had been laying the groundwork to declare victory in the Iran war should Tehran fully reopen the Strait of Hormuz ....

"But that scaled-back objective became more difficult when Iran insisted Saturday on its highest price yet for permitting the free flow of traffic in the waterway, seeking billions of dollars in U.S. payments, the removal of American troops from the region and an end of the U.S. naval blockade, among other things."

Mortgage rates respond to war news because a prolonged closure of the Strait of Hormuz could again choke off 20% of the world's oil supply, putting additional pressure on gas, diesel and many other prices. It would take years to build the infrastructure necessary to bypass the Strait's oil flow completely.

Strategic petroleum reserves in the U.S. and globally are now at multi-decade lows, meaning there's less room to cushion consumers from rising gas prices. It may not feel like it, but this method of suppressing pump prices has been in place since the start of the conflict.

Trading Economics says, "US Strategic Petroleum Reserve crude inventories fell to 307.650 million [barrels, presumably] for the week ending July 24, marking the lowest level since 1983."

Meanwhile, many oil refineries in the Middle East and Russia are out of commission due to damage from the wars involving Iran and Ukraine, sending oil prices lower on most days. Why buy crude oil when you can't refine it?

Unfortunately, that has so far translated into only moderately lower gas and diesel prices because a lack of refining capacity exacerbates rather than moderates supply issues for consumers and businesses, while demand remains fairly steady.

The Fed

The Federal Reserve's rate-setting body (the Federal Open Market Committee or FOMC) left general interest rates unchanged on Jul. 29, as many expected. However, many now think a hike is likely at the next FOMC meeting on Sep. 16, according to the CME FedWatch tool.

Still, that's changing. On Friday evening, that tool showed a 44.4% chance of a hike, while a week earlier that number was 67%.

Assuming that the war in Iran doesn't end quickly, we think such a hike remains a sensible expectation. A prolonged conflict is likely to fuel inflation, and the Fed has a duty to maintain that at 2% annually, a goal reaffirmed by Kevin Warsh, the new Fed Chair, on Jul. 29. The main tool the Fed uses to rein in inflation is rate hikes.

The Fed doesn't directly set new fixed-rate mortgage rates. But the factors that influence its decisions (and to a lesser extent the decisions themselves) certainly do move those rates, usually in advance of Fed rate-change announcements.

Why bond markets act differently from stock markets

Mortgage rates are largely dictated by the yields on a type of bond, the mortgage-backed security (MBS). So, we focus on bond markets.

On May 7, The New York Times explored why stock markets and bond markets have been behaving so differently from each other since the start of the conflict in the Middle East.

Investors in stocks have been wagering that U.S. companies will continue to generate large profits during the conflict. And the stock market typically cares only about whether dividends and company values will continue to rise.

"But the bond market is another matter," said The Times. "Bond traders have maintained a much sharper focus on risk. Yields remain correlated with shifts in the price of oil. As oil prices have spiked and inflation has risen, yields have risen and bond prices, which move in the opposite direction, have fallen."

Mortgage rates today

There are no economic reports on today's MarketWatch economic calendar.

What's next?

This week's star report is Wednesday's consumer price index (CPI) for July. Some months, the CPI rivals the jobs report for its influence on mortgage rates.

Friday's retail sales figures for July might also affect mortgage rates appreciably.

Tomorrow brings two reports, neither of which is likely to move mortgage rates noticeably.