John's Finance Corner: Navigating Market Movements—Inflation, Job Data, and Mortgage Rates
Last week brought a wave of significant economic data, offering us a clearer picture of where we stand and where we might be heading. As a Mortgage Loan Originator, I keep a close eye on these updates because they directly influence the mortgage market and, more importantly, the decisions my clients make. Here’s a breakdown of last week’s highlights and why they matter to all of us navigating the housing market.
We received the Federal Reserve’s preferred measure of inflation: the Personal Consumption Expenditures (PCE) report. The headline PCE data showed a 0.3% increase in January, while the year-over-year numbers slipped from 2.6% to 2.5%. The Core Reading—excluding food and energy—rose by 0.3% monthly and dropped from 2.9% to 2.6% year-over-year. This Core number is particularly significant because it’s the figure the Fed aims to keep at 2%. Seeing it fall to one of the lowest levels in four years was a welcome relief for Treasury Bonds and, by extension, mortgage rates.
We also got the second reading of fourth-quarter GDP, which showed the economy grew at a pace of 2.3%, in line with expectations. This growth was largely attributed to government spending and a slowdown in investments during the last quarter of the year.
Job market data last week painted a mixed picture. Initial jobless claims jumped by 22,000, reaching 242,000 for the week, while continuing claims remained above 1.8 million for the 38th consecutive week. This suggests that once people lose their jobs, finding new employment is taking longer—a potential sign of cooling in the labor market.
So, what does all of this mean for mortgage rates? As we’ve discussed before, mortgage rates often track the movements of the 10-year Treasury yield. While negative economic data is never something we celebrate due to its real impact on individuals and communities, certain trends—like lower inflation and higher jobless claims—can help drive bond yields down. In turn, this eases mortgage rates. Over the last several weeks, we’ve seen encouraging data that has pushed rates lower, offering a bit of relief to buyers and homeowners alike.
This week is shaping up to be just as pivotal. We’re in the midst of “jobs week,” with several labor market reports and private payroll numbers leading up to Friday’s updated unemployment rate. The outcomes of these reports will play a big role in determining whether we continue to enjoy lower mortgage rates or if we give back some of the recent gains we’ve made.
For those of you considering purchasing a home, refinancing, or simply keeping an eye on the market, now is an excellent time to connect and discuss your options. Let’s make sure you’re informed and ready to act, no matter which way the winds shift.
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
