Weekly Mortgage Rate Update-10-28-25
The Sound of Silence
Darkness is indeed feeling like an old friend as we enter day 28 of the government shutdown. Missing key economic updates from the government for almost a month now has markets and the Fed in the dark on the economy. The good news is that mortgage rates held steady last week and start this week off the same as we await the Fed meeting tomorrow.
Fed Rate Cut Tomorrow
Despite the lack of government economic data that the Fed usually relies on to make policy decisions, they will cut the Fed funds rate tomorrow. The expected cut is priced into current mortgage rates, but we may see market movements after the release on comments from Fed Chair Powell. We are interested to see if we get more information on when and how the Fed will stop Quantitative Tightening- currently they are not reinvesting the money from maturing bonds, there are now liquidity concerns for overnight lending between banks that we also saw in 2019 that has them considering changing course on their tightening efforts to support markets. We talked about this last week as it will play a significant role in the direction of mortgage rates.
Last Inflation Reading of the Year?
We did get the release of CPI inflation data last week. This was only released so that the cost-of-living adjustments for Social Security could be determined for 2026 benefits. The report showed core CPI rose 0.2% for the month to a year-over-year rate of 3.1%. That is an increase from the previous month, but better than expected. We saw little reaction to the news with mortgage rates.
B of A commented yesterday: “There is a significant risk that the September CPI is the last inflation print we will get for the remaining Fed meetings this year: the October print is unlikely to be calculated, and the November print will likely be delayed.”
Maybe silence is golden.
No News is Good News
Despite the silence in government data, there are signs that the labor market is continuing to deteriorate. Yesterday Amazon announced 30k layoffs. This follows a report by the New York Times that Amazon plans to automate 75% of its operations by 2033. Some estimate this will equate to the loss of a million jobs. UPS announced more lay offs today and the expectation is more companies will follow. This highlights the fragile state of the labor market outlook long term.
What’s Ahead
Besides the Fed meeting tomorrow we are watching developments with a possible trade deal with China. So far markets are looking at a possible deal being made this week, boosting stocks and bonds as well.
On the technical side, the 10-year Note is still hovering near that 4.00% psychological level, but no further improvements. After the Fed meeting the direction the 10-year Note takes will be a telling sign for near term mortgage rates. Right now, it is telling us that more information is needed to move the needle even lower. Maybe we will get some of that tomorrow?
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