06/19/2026
Mortgage Rates ended the week slightly lower.
Markets reacted strongly when the Fed released a new Dot Plot that revealed half of Fed Governors now see the Fed Funds Rate higher in 2026. The 2-Year Treasury ended the week 9.4 bps higher, the 10-Year Treasury closed 3 bps lower, and the 30-Year Bond ended the week 7.3 bps lower. The 2/10 spread and 2/30 spread flattened 12.4 bps and 16.7 bps respectively. The 2/10 spread, at 27.4 bps, is now the tightest since late February 2025.
Concerns about inflation combined with a strong labor market have given the Fed room to raise the overnight lending rate. Headline inflation has risen sharply this year, from 2.4% in February to 4.2% in May. Much of this inflation has been driven by the rise in oil prices from the closure of the Hormuz Strait. The straight is now open (temporarily?) and oil has moved lower, down 35% from the peak in March, but the Fed does not want to risk a round of reinflation. And with Initial Jobless Claims maintaining very low levels, rate cuts would not be prudent at this time.
