Mortgage Rates Today, July 8, 2026: Rates Under Threat from Escalation in Middle East

The bigger picture

Oil prices and mortgage rates rose yesterday in response to escalating tensions in the Middle East. Iran attacked several oil tankers in the Strait of Hormuz, and the U.S. retaliated with air strikes on the country and the withdrawal of its waiver on Iranian sanctions, says AP.

Two other events could move mortgage rates today. The first is this afternoon's release of the latest minutes of the Federal Reserve's rate-setting body, the Federal Open Market Committee (FOMC). Watch out for committee members' views on future inflation trends.

Also today is a U.S. Treasury auction that could affect mortgage rates. It offers 10-year notes, the yields on which are closely associated with those rates. High demand at Treasury auctions can send mortgage rates lower. But low demand could cause those rates to rise.

Scroll on down for details of today's economic reports and how they might affect mortgage rates.

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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 Fed

May's price indices (the CPI, PPI, IPI and PCE) tend to lend weight to pessimistic arguments about future inflation rates.

And those reports landed either side the last meeting of the Federal Reserve's rate-setting committee. We're due the minutes of the Jun 16-17 meeting today.

Minutes of the previous (April 28-29) meeting were published on May 20 and included the following:

"Almost all participants noted that there was a risk that the conflict in the Middle East could persist for an extended period or that, even after the conflict ended, the prices of oil and other commodities could remain elevated for longer than expected. In such scenarios, these participants expected continued upward pressure on inflation arising from supply chain disruptions, high energy prices, or the pass-through of higher input costs to other prices. The vast majority of participants noted an increased risk that inflation would take longer to return to the Committee’s 2 percent objective than they had previously expected."

Bottom line: "A majority of participants highlighted ... that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent." Policy firming is Fedspeak for a rate hike.

We'll update this section on Thursday. But events surrounding the June meeting showed committee members all but ruling out a further cut to general interest rates this year. And almost half of them now expect a hike in 2026.

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.

Bond markets vs. 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."

Comerica Bank's weekly preview

On Monday, Comerica Bank published its weekly preview:

"The minutes of the Federal Open Market Committee’s June meeting will draw more scrutiny than usual after Chair Warsh shortened the policy statement and eliminated forward guidance from it. The minutes will likely drop their usual description of policymakers’ opinions about their next step for rates, paralleling the leaner statement. In the absence of forward guidance, the discussion of the inflation outlook has the most potential to influence financial markets’ pricing of the Fed’s next steps."

Mortgage rates today

There are two economic reports on today's MarketWatch economic calendar. However, it's vanishingly rare for either to affect mortgage rates perceptibly. And events in the Middle East would likely swamp even normally consequential reports.

Still, for the sake of completeness, here are market expectations for both this morning's reports:

• May wholesale trade — Markets expect trade to have grown 0.3%, more slowly than April's 0.6%
• May consumer credit — Markets expect the net change in consumer credit to be $17.1 billion, less than April's $20.7 billion

Typically, worse-than-expected numbers in a report are better for mortgage rates, while better-than-expected figures tend to push those rates higher, all other things being equal. When numbers come in as expected, mortgage rates rarely move far.

What's next?

No economic reports are scheduled for release on Friday. This week's big events have mostly passed. However, another U.S. Treasury auction is due tomorrow, and that might affect mortgage rates. Economic reports due later this week rarely move those rates.

However, events in the Middle East continue to hang over markets like the sword of Damocles. Events yesterday might push mortgage rates appreciably higher if the new conflict is not swiftly resolved. That's because a prolonged closure of the Strait of Hormuz could again choke off 20% of the world's oil supply, putting renewed pressure on gas (and many other) prices.