Mortgage rates moved up again this week. The latest economic data has been stronger than expected, meaning fewer policy rate cuts than previously thought could be in the cards for 2024.
Falling Treasury yields and mortgage rates reflect the expectation that economic growth will decelerate and that inflation will moderate further. However, the latest employment and wage growth estimates continue to surprise on the upside. And along with strong nominal wage growth comes the risk that inflation would be difficult to keep around the Federal Reserve’s 2 percent inflation target. Mortgage rates bottomed in the last week of December and have been rising since.
Market participants and the Fed will be looking for more disinflation in the latest consumer price index data released later this week. Otherwise Treasury yields could surge back up, pulling mortgage rates up with them.