Look, we're heading into some choppy waters this week with Kevin Warsh taking the helm at the Fed for his second meeting as chair, and frankly, there's more uncertainty than we've seen in a while. According to Redfin News, futures markets are giving it about a one-third shot that rates could go up, which is unusual because the Fed typically likes to signal their moves well in advance. Warsh, though, has made it pretty clear he likes to keep people guessing a bit more, and he's comfortable with some internal debate playing out in public. The June jobs and inflation numbers came in softer than expected, which makes a rate hike tough to justify, but don't be surprised if a couple of Fed members dissent and push for higher rates anyway.
On top of the Fed meeting Wednesday, we're looking at second quarter GDP numbers and core inflation data coming Thursday. The expectation is that the economy picked up steam from the first quarter, while inflation should tick down a notch. But here's the thing that's really keeping rates elevated and twitchy: it's not just about oil prices anymore. According to Redfin News, geopolitical tensions with Iran have energy prices moving around, but the real pressure on mortgage rates is coming from a stronger economy boosted by AI developments and a Federal Reserve that's getting impatient with inflation.
There's also been some noise on the tariff front, with new announcements from the White House, though Redfin News notes most of these were expected moves that replace expiring tariffs, so they're not actually shifting the overall tariff picture much. What did catch my eye was jobless claims hitting their lowest level since 1969, which points to a labor market that's running hotter than people thought.
What I am seeing locally in the Bay Area and throughout the East Bay is that this volatility is making it harder for both buyers and sellers to plan with confidence. Until we get clarity on where the Fed is heading and how inflation actually trends, mortgage rates will keep bouncing around, and that uncertainty tends to make people hesitant to commit.
