Weekly Market Update - Mortgage Rates

by Judith Hayes

Mortgage rates moved higher Friday morning after Fed Chair Warsh delivered a more inflation-focused message than markets had hoped for at Jackson Hole. While some of the latest economic data points to slower growth and improving inflation expectations, Warsh made it clear the Fed isn't yet convinced inflation is moving toward its 2% target quickly enough.

That pushed Treasury yields higher and increased expectations for another Fed rate hike in September. The 10-Year Treasury is trading near 4.71%, keeping mortgage rates near the upper end of their recent range.

What's Happening Now?

• The Fed remains focused on inflation. Warsh emphasized that inflation is still too high and signaled the Fed could take additional action if progress stalls.

• September rate hike expectations increased. Markets are now pricing roughly a 58% chance of another rate increase at the Fed's September meeting.

• There were some encouraging economic signals. Chicago-area manufacturing fell sharply into contraction territory, while consumer inflation expectations improved.

• The labor market remains resilient. Initial jobless claims fell to 203,000, keeping employment strength—and its potential impact on inflation—on the Fed's radar.

• Mortgage rates remain sensitive to incoming data. With conflicting signals on growth, employment and inflation, rates could continue to move as each new report is released.

Bottom Line for Borrowers

The Fed put inflation back at the center of the conversation this week, creating some renewed upward pressure on mortgage rates. But the story isn't settled.

There are signs that parts of the economy are slowing and consumer inflation expectations are improving. The question now is whether upcoming employment and inflation data give the Fed enough confidence to hold rates steady in September.

For homebuyers and homeowners, that means continued rate volatility is likely over the next few weeks. Rather than trying to predict the perfect day to make a move, it may be more useful to understand what today's numbers mean for your individual budget and financing options.

Key Level to Watch

The 10-Year Treasury is near 4.71%, toward the upper end of its recent range. A move below 4.60% could provide some relief for mortgage pricing, while a move above 4.75% could signal additional upward pressure on rates.

Reports

Monday, 08/31

• Nothing

Tuesday, 09/01

• JOLTS Job Openings

• ISM Manufacturing PMI

• Construction Spending

Wednesday, 09/02

• MBA Mortgage Applications

• ADP National Employment Report

Thursday, 09/03

• Initial Jobless Claims