Oil Hit a Six-Month High Friday and the Ten-Year Gave Back Part of Its Rally. The Fed Decides Wednesday.

By Steve Waller · October 26, 2026

Sunday's question, first answer

Sunday's recap asked whether Thursday's rally would survive a hawkish Fed and a hot growth number. It started giving ground before either arrived. The Federal Reserve's H.15 release has the 10-year Treasury at 4.96% on Thursday, down from 5.13% Wednesday. By Friday's close Mortgage News Daily quoted it at about 5.00%, and its 30-year index rose 3 basis points to 7.33%. Freddie Mac's 7.32% from last Thursday is still the official weekly number, but the daily market is already sitting on top of it.

What changed Friday: oil

Brent crude settled at $116.72 a barrel on Friday, up 3.1% on the day and at a six-month high, with WTI at $103.27, up 3.8%. Energy has been the line that kept headline inflation hot all year: September's CPI rose 0.6% for the month and 3.7% from a year ago, while the core index rose only 0.3%. The University of Michigan's October survey put households' one-year inflation expectations at 4.7%, up from 4.6%, and five-year expectations at 3.5%.

That matters because the bond market, not the Fed, sets your mortgage rate. Thursday's drop in yields came from a selloff in technology stocks, not from better inflation news. Oil at a six-month high is the opposite kind of news, and it arrived the next day.

What the Fed is expected to do Wednesday

The decision comes at 1:00 p.m. Central Wednesday, with the target range at 3.75 to 4.00 percent after September's quarter-point hike. Forecasters expect a hold. ING and Continuum Economics both look for the next hike in December instead.

• Watch the dissents. Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas voted for a hike in July. Continuum Economics expects Hammack and Logan to dissent against a pause and calls Kashkari closer. Three dissents against a hold would tell the market December is close to decided.
• No new dot plot. The projections were updated in September and come next in December, so the statement and Chair Warsh's press conference carry all the information.
• The long end does its own thing. When the Fed hiked in September, the 10-year fell. A hold on Wednesday does not guarantee lower mortgage rates, and a hawkish hold does not guarantee higher ones.

What this does to a deal you are underwriting now

Mortgage rates have traded about 2.33 points above the 10-year this week: 7.33% on Mortgage News Daily against a 10-year near 5.00%. Hold that spread and move the 10-year back and forth by the amount it moved last week, and you get the range this week can produce.

Take a $260,000 loan, which is Houston's median with 20% down. At 7.33% the payment is $1,788 a month. If the 10-year goes back to Wednesday's 5.13%, the mortgage index lands near 7.46% and the payment is $1,811. If it falls to about 4.87%, the index is near 7.20% and the payment is $1,765.

Run it the other way. At a fixed $1,786 payment, your exit buyer can borrow about $256,400 at 7.46% or about $263,100 at 7.20%. That is a $6,700 spread in buying power from one week's worth of bond-market movement, about $3,500 each way from where it sits now.

• Fix and flip. If your sale is three to six months out, assume the buyer's rate does not improve. Price the exit so the deal still works at the high end of this week's range, and treat any rally as profit, not as the plan.
• Long-term rentals. On a $250,000 takeout at illustrative market rates, the same range runs from $1,697 to $1,741 a month, a $44 difference. If your coverage ratio only clears at the low end, it does not clear. Use the rate on your own term sheet.
• Ground-up construction. Energy feeds straight into materials and delivery costs. Keep a contingency line that assumes fuel stays near this level through the build.
• Single-family resale. Builders are the competition, and they can buy down a buyer's rate when resale sellers cannot. Tuesday's new-home report shows how hard they are pushing.
• Multifamily. Cap rates follow the 10-year more than the Fed. A 10-year at 5% leaves little room for cap-rate compression in an acquisition model.

Houston and the builders

Tuesday's Census new-home report matters more here than in most of the country. In August, the South accounted for 451,000 of the nation's 684,000 annualized new-home sales, about two-thirds. The national new-home median was $393,700, down 5.8% from a year earlier, and builders carried 8.5 months of supply. A finished house in a Houston subdivision is often competing with a builder offering a lower price and a paid-down rate. If September's report shows builder supply still near nine months, expect those incentives to continue through the winter.

The week ahead

• Tuesday, October 27. Census New Residential Sales for September at 9:00 a.m. Central, against August's 684,000 rate and 8.5 months of supply. The Conference Board's consumer confidence index also comes out, expected near 80.5 from 81.9. The FOMC meeting begins.
• Wednesday, October 28. FOMC decision at 1:00 p.m. Central and Chair Warsh's press conference. Count the dissents.
• Thursday, October 29. The first estimate of third-quarter GDP, expected near 3%, weekly jobless claims, and September PCE inflation, with core expected near 3.1% from a year ago. Freddie Mac's survey also comes out, its first reading after the Fed.

The question for Wednesday's brief is whether oil or the tech-stock selloff wins the 10-year. If the 10-year is back above 5.10% by Wednesday morning, Thursday's survey is likely to give back last week's decline.

The full report, and every earlier one, is available on ACP's website at acp-lending.com. Investors can sign up at acp-lending.com/investor-brief to receive new reports by email.

Sources

• Federal Reserve, H.15 Selected Interest Rates, October 23, 2026
• Mortgage News Daily, Mortgage Rates, October 23, 2026
• Freddie Mac, Primary Mortgage Market Survey
• CNBC, Brent crude oil tops $116, a six-month high, October 23, 2026
• Rio Times, Brent Crude Settles at US$116.72, Up 3.1%
• Continuum Economics, FOMC Preview for October 28
• ING via Investing.com, Federal Reserve Preview: A Pause Before a December Hike
• U.S. Census Bureau, New Residential Sales, August 2026
• Rio Times, Key Market Events for the Week of October 26-30, 2026
• University of Michigan Surveys of Consumers, October 2026 (via Verified Investing)

Market data is from public sources and is provided for information only. Nothing here is an offer of credit, a rate quote, or investment advice. Financing is subject to underwriting, lender approval, appraisal or valuation, title, insurance, property eligibility and program availability.

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