Mortgage rates continued to rise last week.

While inflation measures are improving, the rate of inflation is still well above the Federal Reserve’s long-term targets. Data releases last week showed that economic activity is still robust and labor markets continue to be very tight. With Fed officials all indicating a commitment to containing inflation as the main goal in the near term, markets have adjusted expectations to account for further significant increases in the Fed Funds rate. Investors are pricing in a higher probability of a 75-basis point rate hike at the Fed’s September meeting and a likely higher terminal rate, driving up interest rates in Treasuries and mortgage-backed securities.

Markets will be focused on employment data releases later this week and what implications those results may have on the direction of rates.