Mortgage Rates Today, May 28, 2026: Today's Key Inflation Data Might Overshadow Middle-East Fever

The bigger picture

This morning's inflation report is April's personal consumption expenditures (PCE) price index. This index is the Federal Reserve's favorite gauge of prices because it's more detailed and accurate than the consumer price index (CPI).

Markets sometimes pay more attention to the CPI than the PCE index because it arrives earlier each month and is usually good enough for investors' purposes. However, inflation is currently the hottest topic on Wall Street (the Middle East conflict is of great interest mostly because of its impact on prices), so today's report might garner some big headlines if it contains surprises.

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.

You might have noticed worrying reports in the financial press about the likelihood of inflation getting worse. For example, in an e-newsletter on May 10, The Economist wrote, "The Iran war is already causing pain for American motorists, who are paying more than $4.50 a gallon for petrol. Now Americans face a grocery-price shock."

On May 11, MarketWatch had similar concerns: "The surge in gasoline prices tied to the Iran war is set to drive U.S. inflation to a three-year high — and it might get worse before it gets better.

" ... That’s not the only downside of higher inflation," the report continued. "The increase in prices has handcuffed the Federal Reserve. The central bank is likely to be stymied from cutting interest rates aggressively, leaving the cost of borrowing painfully high for prospective home buyers and anyone who needs a big loan."

The Fed

April's price indices (the CPI, PPI and IPI) tend to lend weight to these pessimistic arguments. (We're due a fourth April price index this morning.) And they landed well after the last meeting of the Federal Reserve's rate-setting committee. Minutes of that 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.

Bond markets vs. stock markets

Mortgage rates are largely dictated by 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:

"Inflation as measured by the PCE price index [due today] likely rose to around 4% in April as gas prices climbed; the PCE is the Fed’s preferred inflation gauge. April likely delivered more solid gains in personal income and spending, but those gains were largely swallowed by inflation. The core PCE price index was likely little changed, hovering around three and a quarter percent. The Fed has made clear they are unhappy to see it stuck above their 2% target.

"Real GDP growth for the first quarter [also due today] is likely to be revised higher in the second estimate, reflecting upward revisions to consumer spending. Inflation in the first quarter also is likely to be revised higher."

Comerica also thought that today's durable goods orders for April would rise, mainly on new orders for aircraft.

Comerica's predictions often differ from market expectations, which are a consensus of a wider pool of analysts' forecasts.

Mortgage rates today

There are five economic reports on today's MarketWatch economic calendar. By far the most influential of these is likely to be April's PCE price index.

Like all price indices, this contains four headline figures. Two cover the reporting month (April), and the other two are year-over-year (YOY) numbers, which cover from May 1, 2025, to April 30, 2026.

One for each period is the vanilla PCE index, which measures price changes across all items in the survey. The other is the "core" PCE index, and this tracks all items except food and energy prices. Given that the Middle East conflict has mostly affected gas, diesel and other energy costs, the core indices are likely to be the less volatile today.

Here are market expectations for those four headline figures:

• April PCE index — Markets expect prices to have risen by 0.5% that month, cooler than the 0.7% increase in March
• YOY PCE index — Markets expect prices to have risen by 3.8% year over year, warmer than the 3.5% increase in March
• April core PCE index — Markets expect prices to have risen by 0.3% that month, unchanged since March
• YOY core PCE index — Markets expect prices to have risen by 3.3% year over year, a little warmer than the 3.2% increase in March

With inflation data, mortgage rates are more likely to fall when a report's numbers are lower than expected, and rise when they're higher.

Absent their containing truly shocking figures, today's other economic reports are likely to be less impactful on markets than the inflation report. Here are market expectations for those four:

• Second revision of first quarter gross domestic product (GDP) — Markets expect growth of 2.0% that quarter, unchanged from the first revision
• Initial jobless claims for the week ending May 23 — Markets expect 213,000 fresh applications for unemployment benefits, up from 209,000 the previous week
• April durable goods orders — Markets expect orders to increase by 3.5% that month, faster than the 0.8% seen in March
• April new homes sales — Markets expect 663,000 (annualized) new homes to be sold that month, down from March's 682,000

Mortgage rates tend to fall when a report's actual figures are worse for the economy than expected, and to rise when they're better. When numbers are on or close to forecasts, those rates rarely move in response to the data.

Tomorrow's scheduled reports rarely affect mortgage rates perceptibly.