Look, according to Redfin News, we're in a bit of a holding pattern right now when it comes to mortgage rates. The big movers these days aren't necessarily the usual economic data points, but rather geopolitical developments and what the Federal Reserve is signaling. Markets are closely watching negotiations involving Iran and Canada, while everyone's waiting with bated breath for Friday's Jackson Hole symposium where Fed Chair Kevin Warsh will give his annual address.
That Jackson Hole speech is really the main event this week. History shows us that when the Fed chair speaks at Jackson Hole, it can move the 10-year yield by around 10 basis points in recent years, though over the longer term the average effect is closer to 5 or 6 basis points. Here's the thing though: Warsh has been pretty tight-lipped about giving the market any forward guidance so far, and there's no indication he'll change course on Friday. So while everyone will be listening intently, this could end up being one of the less revealing Jackson Hole speeches in a while, even if markets decide to make something of it anyway.
We also have Wednesday's core PCE inflation data coming out, which is the inflation measure the Fed actually cares about most. Economists are expecting this number to land somewhere between 0.2% and 0.3% monthly. Now here's what's important to understand: we already got the CPI and PPI numbers earlier this month, and the PCE basically uses the same underlying data. The only differences come down to how different spending categories get weighted and some seasonal adjustments, and neither of those factors should really change how the Fed thinks about inflation progress.
What I am seeing locally here in the Bay Area and East Bay is that folks are getting a bit anxious waiting for clarity on rates. Until we hear from Jackson Hole and get a clearer picture of Fed intentions, I think borrowers should stay ready to act if rates move in their favor, because this kind of uncertainty can shift quickly once we get that speech and these data points.
