You know, mortgage rates are doing something interesting right now that might seem backwards to folks following the Fed news. According to Redfin News, even though economic data last week made a Fed rate hike in October look less likely, mortgage rates actually went up a bit anyway. It's one of those reminders that mortgage rates don't move in lockstep with Fed decisions, because bond market investors are looking at a broader set of concerns.
The economic picture that came through last week was actually pretty dovish. There was a softer jobs report that suggested the Fed doesn't need to keep tightening things, and inflation data came in a touch lower than expected. Fed officials also signaled they're comfortable waiting for more information before making any moves. All of that should have been good news for rates, but the bond market is still nervous and rates climbed up modestly anyway. What's driving it is that investors remain worried about the same issues that have already pushed rates up by about one and a half percentage points so far this year.
Here's what's coming down the pike that matters for rates. We're waiting on fresh inflation numbers that'll be really important for the Fed's October 28th meeting. This week, the market will be paying attention to the minutes from September's Fed meeting to see how convinced the policy committee really is about their interest rate path. Plus, there will be a bunch of Fed officials out speaking, including the New York Fed president, the Vice Chair, and several other leaders. Any one of these communications could move the needle on rates.
The bond market right now is pretty jumpy and ready to sell off if there's any data suggesting economic growth is accelerating. Earlier this week there were some mixed signals from manufacturing and services surveys, and that created some nervous energy in the market. Bond investors are essentially tensed up, waiting for reasons to either calm down or get more worried about whether additional rate hikes might be needed.
What I am seeing locally with my clients is that this kind of volatility in rates makes planning tougher. People are trying to time the market or waiting for clarity that may not come quickly, but the reality is rates could move in either direction depending on what we learn about inflation and growth over the next few weeks. For Bay Area and East Bay buyers and sellers, this is a reminder that the rate environment remains fluid, and the connection between Fed policy and mortgage rates isn't always straightforward.
