Mortgage rates pressed higher again this week, reaching 20-year highs as markets digested economic developments on both sides of the Atlantic.

Enduring turmoil surrounding British fiscal policy continues to concern investors, and UK bonds pressed higher again this week as a result. The subsequent reaction by US Treasuries – which tend to influence mortgage rate movements – wasn’t as pronounced as it has been in recent weeks, but the confusion was still enough to place more upward pressure on mortgage rates. Also influencing rates this week was another strong reading on the labor market. While the September jobs report showed hiring activity continued its gradual cool down, the main takeaways still compared favorably to expectations and historic norms. The report was encouraging enough to prompt a selloff from investors who viewed the news as more ammunition for the Fed to continue its plans to tighten monetary policy in an effort to combat inflation. Speaking of inflation, mortgage rates face another difficult test in the coming week, beginning with Thursday’s September CPI report and followed by other gauges of inflation expectations shortly thereafter.

Evidence of continued price pressures will almost certainly send mortgage rates even higher from their already lofty levels.