“With no Federal Reserve officials’ speeches, mortgage rates eased down a touch this week,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans.
“In a number of speeches last week, Fed officials pointed to the strength of the US consumer and slower disinflation as reasons for less policy easing in 2024 than previously communicated. As a result, financial market participants adjusted their expectations for economic growth, inflation and Fed policy. Strong economic growth, fueled in part by larger fiscal deficits, could keep Treasury yields – and the mortgage rates that follow them – elevated.
“Expect more rate volatility ahead as the Fed and investors wait for more conclusive evidence of a return to low, stable and more predictable inflation. The PCE inflation report this week will likely cause some major repricing activity.”