Good Friday morning from your Hometown Lender,

The data today was exactly in line with expectations. PCE came in at 2.9%. None the less, rates slipping a bit this morning, as bonds lose a bit of ground to start the day.

Why?

Well, it is the highly technical trading pattern of on a holiday weekend, senior traders take and leave instructions to their staff to not make any mistakes. You can’t lose money by selling at a profit. I expect more action next week after the holiday, with labor market data coming, and next Friday’s BLS jobs report.

🏦 Mortgage Market Overview – August 29, 2025

• 30-YR Fixed Mortgage: 6.50% (↓ -0.01%)
• 15-YR Fixed Mortgage: 5.86% (↓ -0.02%)
• 10-YR Treasury Yield: 4.23% (↑ +2bp)
• FNMA 30YR 6.0 MBS Price: 102.08 (↓ -8bp)
• Mortgage–Treasury spread: ~225bps (stable)
• Yield curve remains flat (2s10s spread: 59bps), signaling economic uncertainty

📰 Economic & Political Headlines

🧠 Inflation & Fed Policy

• Core PCE (July) rose +0.3% MoM and +2.9% YoY—exactly in line with expectations. This is the highest annual core reading since February, reinforcing the Fed’s cautious stance.
• Personal Income rose +0.4%, and Personal Spending increased +0.5%, showing resilient consumer demand despite elevated rates.
• Fed Governor Christopher Waller voiced support for a 25bp rate cut in September, but warned he’d oppose a larger cut unless next week’s jobs report shows significant labor market deterioration.

🏠 Housing Market Pulse

• Pending Home Sales fell -0.4% in July, missing expectations of +0.3%. Canceled contracts are rising, reflecting buyer hesitation amid affordability pressures.
• Mortgage applications dipped -0.5% this week, with purchases up +2.2% and refis down -3.5%.
• Home prices are still growing, but at the slowest pace since 2012.

🌍 Political & Global Factors

• Political tension continues around Fed governance, with calls to remove Governor Lisa Cook surfacing in conservative circles—adding uncertainty to future policy direction.

🔮 Forward-Looking Rate Forecast

📉 Rate Cut Odds

• Markets still price in a 90% chance of a 25bp Fed cut on September 17.
• Today’s inflation data supports that view, but next Friday’s August jobs report will be the final swing factor.

📈 Yield Curve & Recession Watch

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

💵 Global Market Signals

• Dollar Index rose to 98.06, limiting imported inflation for now.
• Treasury yields are holding near resistance at 4.24%, with MBS prices softening slightly—suggesting limited rate relief in the near term.

📅🔔 Key Watchpoint

Next Friday’s August jobs report will be pivotal. If unemployment rises or wage growth slows, it could solidify the Fed’s rate cut and open the door to lower mortgage rates in Q4.

Posted by Noble Home Loans | Equal Housing Lender | NMLS #328275 | For informational purposes only.
Not a commitment to lend. Rates subject to change.