Good Tuesday morning from your Hometown Lender,

Rates slightly improved from yesterday, with reprice risk on the day being low.

Despite the headlines about President Trump “firing” Fed Governor Lisa Cook, which if it is true that she committed mortgage fraud (and nothing has been proven yet), she should lose her job (and possibly more), mortgage bonds and the 10-yr have basically shrugged it off and it is not having any immediate effect on mortgage rates. Neither did the durable goods orders this morning, which were down but still came in stronger than expected. Likely to be a pretty calm day from here, consumer confidence data comes out at 10am but won’t be a big deal.

Here are a few high-level insights.

🏦 Mortgage Market Overview – August 26, 2025

• 30-YR Fixed Mortgage: 6.58% (↔︎)
• 15-YR Fixed Mortgage: 6.23% (↔︎)
• 10-YR Treasury Yield: 4.29% (↑ +3bp)
• FNMA 30YR 6.0 MBS Price: 102.08 (↑ +8bp)
• Mortgage–Treasury spread: ~225bps (slightly compressed)
• Yield curve remains flat (2s10s spread: 59bps), signaling economic uncertainty

📰 Economic & Political Headlines

🧠 Fed Policy Signals

• Powell’s Jackson Hole speech signaled openness to a September rate cut, citing “evolving risks” and a potential shift in the Fed’s inflation framework.
• Fed speakers this week (Logan, Williams, Barkin, Waller) may reinforce dovish tones.

📉 Labor Market & Inflation

• Initial jobless claims rose to 235K (vs. 225K expected), continuing claims also climbing.
• Core PCE (Fed’s preferred inflation gauge) due Friday. Forecast: +0.3% MoM, +2.9% YoY.
• Inflation remains sticky, with CPI and PPI readings above expectations.

🏠 Housing Market Update

• New home sales came in at 652K units, slightly down MoM but above expectations.
• Median price fell ~6% YoY to $403,800.
• Builders continue offering incentives, but affordability remains a major headwind.

🔮 Forward-Looking Rate Forecast

📉 Rate Cut Odds

• Markets are pricing in a 90% chance of a 25bp Fed cut on September 17.
• If Core PCE surprises to the upside, odds may fall—keeping mortgage rates sticky.

📈 Yield Curve & Recession Watch

• Flat curve suggests uncertainty, not imminent recession.
• A steeper curve would signal stronger growth expectations and could compress mortgage spreads.

💵 Dollar & Global Factors

• Weakening U.S. dollar may stoke imported inflation, complicating Fed’s path.
• Global bond flows remain cautious, limiting downward pressure on long-term yields.

📅 Weekly Economic Calendar (Aug 26–30, 2025)

• Tue 8/26: Durable Goods Orders, Case-Shiller HPI, Consumer Confidence (Medium impact)
• Wed 8/27: MBA Mortgage Apps, GDP (2nd estimate), Pending Home Sales (High impact)
• Thu 8/28: Weekly Jobless Claims, Personal Income & Spending, Core PCE (Very High impact)
• Fri 8/29: Chicago PMI, Final Consumer Sentiment (Medium impact)

🔔 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: Locking is prudent ahead of Thursday’s inflation data.