Portland Mortgage Market Update — May 15, 2026

It was inflation week with the CPI and PPI reports dropping like a ton of bricks this week. Both reports came in higher than what was expected, like WAY higher. But the bond market kind of shrugged these reads off, like "yeah, no duh inflation is higher, it just cost me over $100 to fill up my gas tank". Rates worsened slightly after these bombs but found some reprieve in a report that that the IEA released yesterday. In its report, the International Energy Agency said they believe that oil will begin gradually flowing through the strait of Hormuz in June with activity picking up in August. The report indicated there would still be a deficit in Q4, but any news is good news and rates tried to recover yesterday.

Then JP Morgan came in and blew everything up. Today they reported that if the Strait of Hormuz remains closed, wealthy nations will see their reserves fall to dangerous levels over the next month and could reach "operational floor" levels in September. (Operational Floor is considered the bare minimum required to meet the demands of infrastructure) This is because the oil that was already through the strait when the war started has all been delivered, and other supply lines are being taxed to the point where they are suffering delays. In the same report, they indicated that as reserves dwindle, the price of oil will become so expensive that demand will suffer making it difficult to reach that floor level. So either way, a pretty bleak outlook going forward. Rates are significantly higher today as a result, by anywhere from .375-.5 in cost.

We have a new Fed Chair! Kevin Warsh was confirmed yesterday and as a reward he gets to walk into this dumpster fire of a market. Between inflation and fears on oil, the bond market seems to be more or less punch drunk and selling everything. Interestingly, one thing that might help rates would be if Warsh comes out indicating a rate hike at the next meeting. This would give the market assurance that we are not going to let inflation run rampant again, as feared by the Survey of Professional forecasters who project inflation to hit 6% today. My concern here is that Warsh has been an advocate of a more "secretive" Fed that doesn't telegraph its moves as much as previous iterations, so we might not hear about a rate hike until it actually happens.