Mortgage rates fell slightly this week in absence of new data, and perhaps more importantly, due to mixed messages from Federal Reserve officials. A divide could be growing among Fed officials, with some expecting three, quarter-point interest rate cuts this year, and others forecasting fewer. Those forecasting more cuts are more confident that inflation is more firmly under control.

The 10-year yield reflects expectations about future inflation and future economic growth. Higher economic growth and perhaps less or slower disinflation could keep yields and mortgage rates 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. This week’s core PCE price index data release will likely cause more repricing activity.