Good Tuesday morning from your Hometown Lender,

Friday was a great day for bonds and rate sheets alike, with bonds improving near the highs of the day as most lenders were setting rate sheets, setting them on fire. The CPI inflation data came in at or below expectations, with headlines that could shout that it was the lowest level in almost 5-years. It wasn’t enough to drive rates that much lower, but it was a big improvement in pricing, despite markets not changing the outlook of no possibility of a Fed rate cut at the March meeting or much likelihood of one in April either. The gains in bonds held through the day but were a bit tenuous heading into a three-day holiday weekend.

Rates today are slipping a bit. Just paring some of the gains from Friday and moving to a more neutral stance on the charts. We need to break and hold below 4.05% on the 10yr note for more sustained improvement. Currently we are at 4.06%. There isn’t a lot of movement for bonds, since not only was the U.S. markets closed yesterday for Presidents Day, but most Asian markets were also closed for the Lunar New Year. We do get some unemployment info, inflation reading, and GDP later in the week so we will certainly see some volatility then.

For now, it is likely ok to float locks. I am not sure though for how long.

Market Analysis – from a higher view:

Market Analysis – Quick Snapshot

10-year Treasury: ~4.06% on the latest U.S. Treasury par-yield table (2/13 close), trading around ~4.05% today.
Fed funds rate: 3.50%–3.75%, unchanged at the Jan 28 FOMC meeting.
Inflation (latest CPI, Jan 2026): Headline +0.2% MoM / +2.4% YoY; Core (ex-food/energy) +0.3% MoM / +2.5% YoY. BLS also notes Oct/Nov 2025 data gaps from the lapse in appropriations.
Mortgage rates (national ballpark): Freddie Mac weekly survey 30Y 6.09% / 15Y 5.44%; daily lender-quoted average around 6.04% (MND).
Housing pulse: Builder sentiment (NAHB/Wells Fargo HMI) at 36; existing-home sales fell to 3.91M SAAR in January with 3.7 months supply.

1) Market Analysis – What Hit This Morning (CPI)

No fresh CPI print this morning; markets are still digesting Friday’s January release.

Headline CPI: +0.2% MoM, +2.4% YoY
Core CPI: +0.3% MoM, +2.5% YoY
Notable internals: Shelter +0.2% MoM; energy -1.5% MoM; airline fares +6.5% MoM
Data caveat: BLS explicitly flags missing Oct/Nov 2025 values due to the appropriations lapse, which can muddy base-effect comparisons.

Narrative you can use:
“Inflation is cooler at the top line, but core is still sticky enough to keep the Fed patient. This is progress, not mission accomplished.”

2) Fed Watch

The Fed remains in “show-me” mode at 3.50%–3.75% after the Jan hold.
Today’s Fed tone is mixed but not contradictory: Barr signaled likely hold-for-longer caution, while Goolsbee said several cuts are possible if inflation keeps gliding toward 2%.
Market pricing still leans to no March move (Reuters cites >94% hold probability from FedWatch) with better odds for easing by midyear.

3) Market Analysis – Where Mortgage Rates Actually Are

Freddie benchmark: 30Y fixed at 6.09%, 15Y at 5.44%.
Daily street read: around 6.04% for top-tier 30Y scenarios (varies by LLPA, down payment, occupancy, fico, and lock period).
With 10Y near ~4.05, the rough primary spread is still around ~2.0 points—better than peak stress eras, but not yet “cheap money nostalgia” territory.

4) Market Analysis – Housing Market Check

Builders: Confidence slipped to 36, still deeply below neutral (50), with affordability and cost pressures still a grind.
Resales: January existing sales dropped 8.4% MoM to 3.91M SAAR; inventory 1.22M and 3.7 months supply. Median price $396,800 (+0.9% YoY).
Mortgage demand: MBA composite down 0.3% WoW, purchases -2% WoW, refi +1% WoW and +101% YoY.

5) Political Backdrop & Fed Independence

The policy backdrop still matters because it influences inflation expectations (tariffs/cost pass-through) and therefore rate volatility. Builders are explicitly calling out policy-driven cost pressures in current sentiment commentary.
Leadership transition risk is now part of the macro narrative: Reuters reporting points to Kevin Warsh as the nominee to replace Chair Powell, which is feeding market assumptions about policy after Powell’s term.

6) Market Analysis – What This All Means for Rates Going Forward

Scenario	Macro setup	Fed path	30Y mortgage rate bias
Base case (most likely)	Inflation cools gradually; labor stays decent	Hold near term, first cut around midyear	~5.9%–6.3%
Sticky-inflation case	Core/services re-firm, policy costs feed through	Longer hold; cuts pushed later	~6.3%–6.8%
Faster-cooling case	Softer labor + cleaner disinflation trend	Earlier/more confident easing	~5.6%–6.0%

This is a working scenario framework, not a crystal ball. Markets are currently pricing a patient Fed now, with more action possible later in 2026 if inflation behaves.

7) Practical Takeaways

For buyers: Payment strategy still wins—seller credits, buydown structure, and realistic lock windows matter more than waiting for a headline miracle.
For sellers: Correct pricing + concession strategy is still your fastest path to net certainty in a 6%-ish mortgage world.
For agents: Pre-approval quality and loan-structuring speed are decisive in this tape; edge comes from certainty, not bravado.