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The Inflation Waiting Game

Market Update | Jason Obradovich

Hello everyone. Welcome back to the Mortgage Rundown. Today we are going to talk about what’s happening with interest rates.

Another month rolls by and another month we see inflation continuing to come down. Last week, Core PCE data for January was released showing that on an annualized basis, inflation is sitting right around 2.8%. While the news is welcome, the fact that CPI and PPI were unexpectedly high in January and showing little signs of slowing down, has created a lot of conflict in the market about how long this inflation battle will take.

You may not have noticed but rates moved much higher in February. The three-year Treasury was up almost 50bps for the month as the market adjusted for the fact that the inflation battle is not nearly over and it’s very likely that the Federal Reserve won’t lower interest rates until June or after.  The market is still pricing in 3-4 cuts this year but those likely won’t happen until the very end of the year.

Moving over to the jobs market, we continue to see the unemployment rate hovering around 3.7%. When you combine that with the strong jobs opening’s data, it’s very clear that, so far, these much higher interest rates are not impacting employment.

Over the next week, please keep an eye on the following items. First and foremost is the jobs data for February which comes out on Friday, not to mention CPI data for February, which comes out next week.

That’s it everyone from the capital markets desk this week. Thank you all for watching and have a great day.

For answers to your questions about buying a new home, reach out to your Loan Officer today. They’ll be happy to go over what products and assistance might be available to you and help you choose the right loan for your unique needs.


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