Headline CPI runs hot on gasoline, core holds at 2.4%

August CPI landed at 8:30 this morning and it is two different reports depending on which line you read. All items rose 0.4% on the month and 3.4% over the year — the kind of print that normally ends a lock-or-float conversation on the spot. But gasoline rose 3.9% in August and energy 2.1%, and BLS attributes more than a third of the entire monthly all-items increase to gasoline alone. Strip food and energy out and core rose 0.3% on the month and 2.4% over the year, with shelter — the largest single weight in the index — up 0.3% for the month and 3.0% over the year. A headline driven by a Persian Gulf supply shock is a different animal from broad domestic price pressure, and the series the Fed actually steers by is the core one.

Yesterday's brief flagged PPI's 0.4% August rise as the setup for this morning's print, and the bond market did not wait for it. Mortgage-backed securities gave up close to a full point by the 4:00 pm close and the 10-year Treasury rose 11.4 basis points to 4.95%, its highest level since October 2023, on the PPI reaction plus an overnight surge in crude. Brent traded above $100 and WTI closed in on triple digits as U.S. and Iranian forces exchanged strikes around the Persian Gulf, with commercial tankers hit on both sides.

The two stories are one story. Oil is what lifted the CPI headline, oil is what lifted yields yesterday, and the Gulf is why both moved. That matters for how long the move lasts: an energy-driven inflation impulse is the kind central banks have historically looked through, because it reverses when supply normalizes and it never reaches core. Core at 2.4% is close to target. So the long end is pricing a geopolitical premium at the same moment the underlying inflation data arguably improved.

Where that leaves your pricing depends on which survey your borrower is reading, and today the gap between them is the conversation. Bankrate's daily 30-year average sits at 6.85%, unchanged from yesterday, up 2 basis points on the week and 13 on the month, and 6 basis points below its 90-day high of 6.91%. Mortgage News Daily's daily survey has the 30-year at 7.07% — a real 7-handle, and the source of this week's "rates top 7%" headlines. Freddie Mac's weekly PMMS, published yesterday, reads 6.76%, up 5 basis points on the week. All three are accurate; they measure different things, and a borrower who Googles a number will land on one of them without knowing which. On a $400,000 loan, 6.85% is about $2,621 a month — roughly $35 more than the same loan a month ago and $75 more than three months ago. The FOMC meets Tuesday and Wednesday, and this meeting carries a Summary of Economic Projections: the dot plot arrives with the statement at 2:00 pm ET Wednesday, press conference at 2:30. A borrower still floating should understand that Wednesday is a scheduled event on a week that has already given up 11 basis points in the long end.

FHA put a date on alternative credit scores. FHA INFO 2026-21, issued yesterday, names January 1, 2027 as the implementation date for VantageScore 4.0 and FICO Score 10T alongside Classic FICO, with the TOTAL Scorecard updated for case numbers assigned on or after that date, Title II forward mortgages only. FHA also published an Alternative Credit Scores Preparedness Guide and TOTAL Developer's Guide Release 5.0, with virtual office hours set for November and January. That is a systems-and-vendor question before it is an underwriting question — mortgagees are told to confirm now that their credit and technology partners will be ready. Separately, CrossCountry Mortgage raised its own conforming ceiling to $845,000 ahead of FHFA's November limit announcement, following Rocket's higher-limit marketing push, so some high-balance borrowers have a conventional option this quarter they did not have last. The MBA's Mortgage Credit Availability Index fell 1% in August to 107.3, driven by a 2.5% drop in jumbo offerings while government credit was unchanged — notable in the same week jumbo pricing widened. The banking agencies issued an interim final rule expanding how many community banks qualify for an 18-month examination cycle, and the Fifth Circuit affirmed dismissal of the antitrust challenge to NAR's three-way agreement, leaving MLS access and association membership requirements as they were. One near date: FHA Connection starts requiring identity proofing for new users on Monday, September 14 (FHA INFO 2026-20), so onboard anyone who needs FHAC credentials with that in mind.