Unusual Rally for Mortgage Rates Headed Into Labor Day Weekend

Mortgage rates drifted upward over the past week, straying ever so slightly from the narrow range that has endured for the last few weeks.

Financial markets are usually quiet in the days heading into the Labor Day holiday, but they rallied this week around news of the broad outlines of a restructured trade agreement between Mexico and the United States. The pact is still tentative at best: Many of its details are still uncertain, including the degree to which Canada will be involved. Still, a confirmed deal would boost long-term growth compared to the present expectation that the existing arrangement would be discontinued.

This trade-related upward momentum was tempered, however, by disappointing housing data as well as by comments made by Fed Chairman Jerome Powell at the Kansas City Fed’s Jackson Hole conference late last week, which outlined a more gradual pace of rate increases for the near future.

Financial markets are expected to go even quieter closer to the holiday weekend. However, with several high-profile Fed speeches scheduled for early next week, the beginning of September could bring news that nudges rates further from their late summer stillness.