Good Monday Am from your Hometown Lender,
I’ve changed the format a bit to make it a bit more user friendly. Feedback is always welcome.
Last week ended on a high note with bonds rallying on Powell’s Jackson Hole speech, but perception was better than reality at the time. The reality was/is that Friday’s rally merely reinforced the trading range that has been ongoing since the August 1st jobs report. At the present pace and considering the econ calendar in the week ahead, we could be waiting for next jobs report before seeing a meaningful challenge to that range (roughly 4.20-4.35 in 10yr yields). This week’s key event is Friday’s PCE inflation. Even if it doesn’t tend to move markets as much as other reports, it’s important confirmation. It’s also worth more to the Fed when it comes to making a September rate cut decision.
Here are some bullet points to sift through.
Daily Mortgage Market Analysis – August 25, 2025
📊 Market Snapshot
| Instrument | Rate/Price | Change |
| 30-YR Fixed Mortgage | 6.58% | ↔︎ |
| 15-YR Fixed Mortgage | 6.23% | ↔︎ |
| 10-YR Fixed Mortgage | 4.29% | ↑ +3bp |
| FNMA 30YR 6.0 MBS Price | 102.05 | ↑ +5bp |
Spreads remain compressed, with the mortgage-Treasury spread at ~225bps—slightly tighter than last week.
🧭 Economic & Political Developments
🔥 Inflation Watch
- Core PCE (Fed’s preferred inflation gauge) due Friday. Forecast: +0.3% MoM, +2.9% YoY.
- Recent PPI and CPI readings showed modest increases, keeping inflation above the Fed’s 2% target.
🧠 Fed Signals
- Powell’s Jackson Hole speech hinted at a possible rate cut in September, citing “evolving risks” and the need to reassess the 2% inflation framework.
- Fed speakers this week (Logan, Williams, Barkin, Waller) may reinforce dovish tones.
📉 Labor Market Cooling
- Initial jobless claims rose to 235K vs. 225K expected.
- Unemployment steady at 4.2%, but continuing claims are climbing—suggesting softening labor conditions.
🏠 Housing Market Pulse
- New home sales fell 0.6% in July but beat expectations at 652K units. Median price dropped nearly 6% YoY to $403,800.
- Builders are leaning heavily on incentives (rate buydowns, upgrades), but effectiveness is waning amid affordability challenges.
🔮 Forward-Looking Considerations
📉 Rate Cut Expectations
- Markets are pricing in a 90% chance of a 25bp Fed rate cut on September 17th.
- If Core PCE comes in hot, that probability could drop—keeping mortgage rates elevated.
📈 Yield Curve & Recession Signals
- The yield curve remains flat, with the 2s10s spread at 59bps. This reflects uncertainty, not imminent recession.
- A steeper curve would signal stronger growth expectations and could help compress mortgage spreads.
💵 Dollar & Global Factors
- The U.S. dollar continues to weaken, which could stoke imported inflation and complicate the Fed’s path.
- Global bond flows remain cautious, limiting downward pressure on long-term U.S. yields.
📅 Weekly Economic Calendar (Aug 25–30, 2025)
| Date | Event | Market Impact Potential |
| Mon 8.25 | No major data | Low |
| Tues 8.26 | Durable Goods Orders, Case-Shiller HPI, Consumer Confidence | Medium |
| Wed 8.27 | MBA Mortgage Apps, GDP (2nd estimate), Pending Home Sales | High |
| Thurs 8.28 | Weekly Jobless Claims, Personal Income & Spending, Core PCE | Very High |
| Fri 8.29 | Chicago PMI, Final Consumer Sentiment | Medium |
- 🔔 Key Watchpoint: Thursday’s Core PCE and GDP revision will be pivotal for rate direction. A hot inflation print could stall Fed easing and keep mortgage rates elevated
📌 Strategic Takeaways for Clients
- 🕒 Locking vs. Floating: Today’s pricing is stable, but floating offers limited upside. Locking may be prudent ahead of Friday’s inflation data.
- 🧮 Affordability Planning: With rates sticky near 6.5%, emphasize budgeting tools and rate buydown strategies.
- 📣 Client Messaging: Position the current market as transitional—rates may ease slightly in Q4, but volatility remains.
Stay safe and make today great!!