Mortgage rates trended higher on the week as the market continues to gauge the economy’s path forward.

By now, it’s well known that mortgage rates are much higher than they were to begin the year, as a combination of increased inflation expectations and growing signals that the economy is recovering have propelled rates upward. The question now is where the market goes from here. While the absolute change in rates from early January has been significant, it hasn’t been continuous. There have been brief periods along the way in which the upward movement in rates stalled, and even reversed, before subsequently resuming. Developments in recent days suggest that this scenario has again begun to take shape. February inflation data showed that despite the growing expectations, upward price pressures remain muted at least for now, and separately, an auction for 10-year U.S. Treasury bonds – which tend to dictate the path of mortgage rates – was met with firm demand.

These two factors pushed Treasury yields downward and helped halt mortgage rates’ recent upward momentum. So, while the longer-term path forward for mortgage rates is almost certainly upward, these recent developments may indicate that the frantic upward trend in rates could be subside in favor of more modest changes.