In A Nutshell: There’s still upward pressure on rates, as bond market investors have all of the same worries that have caused mortgage rates to increase by 1.5 percentage points already this year.
Last Week’s Highlights
Last week’s main economic data and news all reduced the probability of a Fed rate hike in October. They took some pressure off expectations for cumulative hikes through the end of 2027, but mortgage rates still ended the week up modestly. The biggest development was a weak jobs report that, despite some noisy statistical issues, indicates no pressing need for the Fed to hit the brakes further. There was also a PCE inflation report that showed lower inflation because of some methodological changes, but actually dropped a tad more than expected. And Fed officials broadly signaled a willingness to wait for more data before hiking again.
Upcoming Attractions
We have to wait another week for the next round of inflation data, which will be a deciding factor for the October 28th Fed meeting. This week, the focus will be on the FOMC minutes from the September Fed meeting to gauge how much conviction voters had about the projected path of monetary policy. Also, Fed officials will continue to be out in force with many speaking engagements: Those include New York Fed President Williams (Tuesday), Vice Chair Bowman (Tuesday), Dallas Fed President Logan (Tuesday), and Governor Waller (Thursday).
Finally, bond investors are currently highly sensitive to any data that supports the narrative that economic growth is taking off, which would necessitate more hikes from the Fed. This morning’s PMI and ISM surveys were decidedly mixed, but were seen as a reason to worry for a bond market that’s tensed up and ready to sell off at the slightest provocation.
Latest Housing Market Reports
- Price-Drop Rate Ticks Up to Record September Rate Amid Strong Buyer’s Market
- Don’t forget to check out Redfin Chief Economist Daryl Fairweather’s latest housing roundup
Chen Zhao
Chen Zhao is the head of economics research, where she produces research on the housing market for public and internal audiences.
Previously, she was an executive director leading housing finance and financial markets research at the JPMorgan Chase Institute. Prior to joining JPMCI, Chen was an economics consultant at Analysis Group, Inc., where she worked on financial litigation cases and led teams conducting health economics and outcomes research on behalf of pharmaceutical companies.
While in graduate school, Chen was with the Center for Economic Studies and the Social Economic and Housing Statistics Division at the US Census Bureau, where she conducted applied microeconomics research using large scale restricted-access linked survey-administrative data. She started her career at the White House Council of Economic Advisers, where she focused on labor and health economics.
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