This is Matt Graham with the MBS Live Market Update. Last week inflation data was in focus with the biggest report being Tuesday’s Consumer Price Index. It was in line with expectations at the headline level, but fairly friendly in terms of internal components. It didn’t cause a big reaction in rates, but it did cause a positive reaction in rates, helping mortgage rates hit their lowest levels in just over 10 months. Things didn’t change markedly after that, but the Producer Price Index on Thursday morning did happen to push back in the other direction. It came in much higher than expected, both at the headline and the core level with trade related components suggesting an impact from tariffs, it’s too soon to tell what the ultimate impact will be or whether it will be a one-off price increase. But at the very least, the change in PPI values means that there’s still plenty of uncertainty when it comes to determining how many rate cuts there will be through the end of 2025. At present, the market sees a rate cut at the September meeting and then one additional cut. It could come in November, it could come in December, or possibly not at all. Then again, there could be three cuts in 2025, and it all depends on the nature of the economic data in the coming months with an especially large focus on the next jobs report in early September. Last week ended with rates pushing up to their highest levels of the week. After the retail sales report came out stronger than expected. It was 0.5 versus 0.5 at the headline level. But the control group or core retail sales, which strips out autos, gas and building supplies, came in at 0.5 versus 0.4. There were also big upward revisions to last month, and that ultimately set a negative tone for bonds in the week ahead. The data starts off fairly slowly, but then gets a little bit more active at the end of the week. Monday and Tuesday have only relatively inconsequential housing related reports with builder confidence already out this morning at 32 versus 34, still kicking around in the basement levels there, and that’s been the case for several years. Building permits and housing starts tomorrow. Not a market mover, but potentially relevant to the housing market, although probably not relevant in this case because they too have been sideways in a fairly low range. Then on Wednesday, things get more interesting with the start of the Fed’s Jackson Hole Symposium, as well as minutes from the last Fed meeting. Those minutes probably don’t have a huge potential impact on the bond market because they’re three weeks old at this point. And we’re more interested in seeing how the Fed feels about the data that’s come out since then. So the Jackson Hole speeches will be more relevant, especially the one from Fed Chair Powell, which is currently scheduled for Friday at 10:00 AM. There will be other speakers throughout the last three days of the week, but mostly on Thursday and Friday. We get existing home sales on Thursday morning, not a market mover, but there again, also interesting for the housing market, Philly Fed Index on Thursday morning, along with jobless claims at 8:30 AM Those are really the only economic data points with any potential market impact, and even then, it’s not a very big impact. So the bottom line is we’re more tuned into Fed comments than anything else. And if that proves to be fairly underwhelming, we are waiting for the next jobs report in early September. That’s all for now. Back to you.
Matt Graham, Founder and CEO, MBS Live
Matt began as an originator in 2002. He fell in love with the idea of following MBS in real-time but felt that existing products were only scratching the surface. Thus was born MBS Live in 2007, the first-of-its-kind platform with real-time market data/analysis, and live chat with analysts, traders, and originators around the country. He is currently the Founder and CEO of MBSLive!
He’s been covering bond/mortgage markets, writing commentary, alerts, and chatting with the live community every business hour of every business day ever since.
Matt also serves as the Chief of Operations for mortgagenewsdaily.com, where he is one of the industry’s most respected mortgage rate experts, frequently quoted in the media. Mortgage News Daily’s rate index is used as the definitive resource on day-to-day mortgage rate averages.
He lives in the Pacific Northwest with his wife and son where he enjoys skiing, fishing, coaching youth sports, playing the guitar, and more DIY projects/hobbies than he’d care to admit.