Mortgage rates fell this week as economic data shows inflation cooled along with a moderation in US consumer spending. The latest inflation data eased pressure on bond yields, prompting mortgage rates to tick downward in recent days. A weaker-than-expected report on June retail sales activity offered some additional support, on hopes that moderating consumer spending will help inflation cool further.

However, despite these modest improvements, the path forward for mortgage rates – as always – remains unclear. Next week’s policy decision from the Federal Reserve is sure to bring more meaningful movements in rates. And, more broadly, the improvement on key inflation measures coupled with a resilient labor market suggest recession risk is receding, making subsequent downward mortgage rate moves far from a sure thing.