Mortgage rates subject to the impact of upcoming events | Jobs Reply

The week started out pretty uneventful for mortgage rates, at least in the big picture. In the smaller picture, there was a bit of drama as the average lender was forced to raise costs slightly in the middle of the day due to deteriorating market conditions. But those changes pale in comparison to the volatility to be seen in the coming days, as the market digests the long-awaited Consumer Price Index (CPI) tomorrow morning.

Then, a day later, we’ll get the Fed’s next rate hike, likely a bit lower than the previous hike, as well as the Fed’s quarterly update of rate hike forecasts. The Fed festivities will conclude with a press conference with Fed Chair Powell, which will give him an opportunity to clear up any overreaction to the forecasts or the announcement itself.

The last time Powell spoke qualitatively about the Fed’s policy outlook, markets cheered what they saw as the Fed’s softening stance. In fact, many Fed speakers agree that it’s time to ease, but not the time to ease. Instead, they want their walk rates to continue, just at a slightly slower pace. Since then, they have called for rates to remain at the ceiling for as long as possible. It would take a big and sustained drop in inflation to change that.

Both the market and the Fed will take tomorrow morning’s CPI data into account when assessing expectations for a fall in inflation. This report isn’t enough to change the narrative alone, but it can provide a big push in one direction or the other. After all, the latest CPI report was responsible for the biggest one-day drop in mortgage rates on record. Tomorrow’s CPI offers the opportunity to validate or reverse these conclusions. That doesn’t mean it’s going to be another record-breaking day, but there’s every chance we’ll see some really big moves.

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